Retirement Proposals Dropped From Framework Legislation, Nov. 4, 2021

As negotiations over the framework spending legislation stalled last week, Congress took an unexpected turn and dropped all retirement proposals from the spending package. That includes proposals to require certain employers to enroll employees automatically in retirement savings programs and the increased credits for small businesses who adopt a retirement plan or auto-enrollment provision for the first time. All provisions that would close the "backdoor" to Roth IRAs for high earners were also dropped from the proposal, as were the changes that would impose contribution limits on high-income taxpayers with large IRA balances. The earlier proposal would have also changed the Saver's Credit by turning it into a government-sponsored matching contribution. For more information on the current Roth conversion rules that allow higher income taxpayers to indirectly fund a Roth account, see Q 3663.