New bipartisan legislation introduced in the House of Representatives seeks to help older retirement savers more easily roll assets from their 401(k) accounts into annuities.
The bill, which is sponsored by Reps. Jimmy Panetta, D-Calif., and Darin LaHood, R-Ill, also seeks to simplify the 402(f) notice explaining workers' retirement plan distribution options.
The "Retirement Simplification and Clarity Act" bill would implement recommendations from the Government Accountability Office to reform the 402(f) notice process.
A 402(f) notice is a document provided to individuals leaving an employer and seeking distributions from their 401(k) plans. The bill directs the IRS to redesign the notice using “plain and concise language.”
The updated notices would include clearer explanations of all distribution options, including rolling over savings into a new plan or retaining them in the current plan, according to the lawmakers. Additionally, the bill would expand in-service rollover options by allowing individuals aged 50 and older to roll over their employee-sponsored 401(k) savings directly into an annuity.
In a joint statement, the lawmakers said the legislation would address significant barriers and complexities that compromise Americans’ savings as they shift into retirement.
