Reps. Jimmy Panetta, D-Calif., and Darin LaHood, R-Ill. reintroduced the Retirement Simplification and Clarity Act, bipartisan legislation to streamline the 402(f) notice process for easier rollovers from 401(k)s into annuities for individuals 50 and older.
“Navigating the various methods of saving for retirement can get very complicated, very fast,” Panetta said in a statement. “This bipartisan bill helps Americans plan for retirement by making the process simpler and giving them more flexibility. By helping Americans make informed decisions about their savings, we can strengthen their financial security for retirement and the years ahead.”
The bill would also broaden in-service rollover options by allowing individuals aged 50 and older to transfer funds from their employer-sponsored 401(k) accounts into an annuity.
The Retirement Simplification and Clarity Act, H.R. 6324, first introduced last December, would implement key recommendations from the Government Accountability Office to streamline the complicated 402(f) notice process, the lawmakers state.
A 402(f) notice is the document provided to individuals who leave an employer and request a distribution from their 401(k) plans. The notice outlines distribution options and their tax implications.
"Under the bill, the IRS would be directed to redesign this notice in clear, straightforward language," the lawmakers said. "The revised version would provide plain explanations of all distribution options, including rolling over savings into a new plan or leaving them in the current one, so that individuals can make well-informed decisions about their retirement funds."
The American Council of Life Insurers and the National Association of Insurance and Financial Advisors support the bill.
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