What You Need to Know
- The plan would prohibit further contributions to a Roth or traditional IRA if the account exceeds $10 million.
- Roth IRA conversions would be prohibited for high-income taxpayers.
- The panel also plans to vote on increasing the corporate and capital gains tax rates.
The House Ways and Means Committee plans to vote on legislation Tuesday and Wednesday to usher in several changes to individual retirement accounts as well as increase the corporate tax rate and raise taxes on high earners.
Committee Chairman Richard Neal’s plan, released Monday, prohibits taxpayers from contributing to their IRAs once their account balance exceeds $10 million, increases the required minimum distributions for high-income taxpayers with large balances and eliminates so-called “backdoor” Roth IRA strategies for certain taxpayers.
“It’s off the charts stuff. Making all these laws for three or four people is insane,” Ed Slott of Ed Slott & Co. told ThinkAdvisor Monday. “To try and limit the amount people have in an IRA is almost un-American.”
The Massachusetts Democrat announced that his committee will continue to consider measures on Tuesday and Wednesday under the budget reconciliation instructions.
Ways and Means also will vote on measures to increase the capital gains tax rate for high-income individuals to 25% and increase the top marginal individual income tax rate to 39.6%.
This marginal rate applies to married individuals filing jointly with taxable income over $450,000, to heads of households with taxable income over $425,000, to unmarried individuals with taxable income over $400,000, to married individuals filing separate returns with taxable income over $225,000, and to estates and trusts with taxable income over $12,500, according to Neal’s plan.