Sponsor
Ronald Lee Wyden
Senator · D-OR
Senator · D-OR
The bill limits tax‑deferral advantages for very large retirement accounts and increases required distributions to capture revenue and curb large tax benefits for the wealthiest savers, while imposing new compliance, withholding, and liquidity burdens that complicate administration and raise taxes or penalties for affected account holders.
Retirees and other taxpayers with very large aggregate retirement balances (the wealthiest account holders) will see limits on further tax‑favored deferral and increased required distributions, converting tax‑deferred balances to taxable income sooner and reducing long‑term tax advantages for the richest savers.
Taxpayers are subject to a clear enforcement treatment for excess contributions (treated as 'excess contributions' under existing rules), creating a defined tax consequence and a mechanism for addressing noncompliance.
Taxpayers who move accounts because of death, divorce, or separation or who make rollovers are exempted from the annual limit, preventing unintended taxation of common transfers and preserving ordinary family and estate transitions.
Plan administrators, employers, and many taxpayers will face substantial new compliance burdens and ongoing administrative complexity to aggregate vested balances across plans, apply the new limits and allocation rules, adjust withholding and reporting, and follow Treasury guidance.
High‑balance taxpayers (wealthy retirees and account holders) will face both restrictions on making additional IRA contributions and larger required minimum distributions, reducing retirement saving flexibility and increasing taxable income—potentially pushing some into higher tax brackets.
Recipients may encounter more cash‑flow and tax‑planning disruption because of special withholding and tax‑reporting rules (including a 10% default withholding and limits on certain withholding elections), complicating budgeting and increasing interim tax burdens.
Based on analysis of 2 sections of legislative text.
Limits annual retirement contributions and raises required minimum distributions for very high‑income taxpayers with very large retirement balances, with excise taxes for excesses.
Official title: Amend the Internal Revenue Code of 1986 to impose limitations on high-income taxpayers with large retirement account balances.
Introduced July 21, 2026 by Ronald Lee Wyden · Last progress July 21, 2026
Limits how much very high‑income taxpayers with very large retirement account balances can add to individual retirement plans each year and increases required minimum distributions (RMDs) for those taxpayers, with excise taxes on excess contributions and rules to allocate higher RMDs across accounts. The proposal sets an initial applicable dollar amount of $10,000,000, defines income thresholds that identify "applicable taxpayers," exempts certain employer SEP/SIMPLE contributions and rollovers from counting toward the cap, and directs Treasury to issue implementing regulations. Effective for taxable years beginning after December 31, 2026.