The retirement bill the House of Representatives passed on Thursday includes an assortment of changes for participants in 401(k) plans and owners of individual retirement accounts.
The Senate may be poised to pass the bill, or a similar one, quickly and send it to President Trump, who is expected to sign it, The Wall Street Journal reports.
Here’s what the bill can mean for you:
• Annuities: It will become easier to convert your retirement savings into a steady lifetime income—a feature common to old-fashioned pensions—by buying an annuity in a 401(k)-style retirement plan.
• Contributions: Gone would be the age cap for contributing to a traditional IRA, currently 70 1/2, making it easier for people with taxable compensation to continue saving.
• More details: It will be easier for employees to understand how much monthly income their 401(k) balance would support by requiring employers to disclose an estimate on 401(k) statements.
• Withdrawals: For new parents, the bill would allow you to take penalty-free distributions from 401(K)s and IRAs of up to $5,000 within a year of the birth or adoption of a child to cover associated expenses.
• Inheritance: If you inherit an IRA, you’d no longer be able to liquidate the balance over your lifetime and stretch out tax payments. Instead, you must withdraw the money within a decade of the IRA owner’s death and pay any taxes due. Read the full story for more information.