Retirement Rollover Flexibility Act

Summary

Makes it easier to move money from a Roth IRA into a workplace Roth account (a designated Roth account) by allowing a direct trustee-to-trustee rollover that is treated the same as a rollover contribution for tax and timing rules. Sets conditions for which Roth IRAs qualify, clarifies how rollover amounts are treated for principal vs. earnings, adjusts how the 5-year/nonexclusion-period rule is determined, and applies to amounts paid or distributed after enactment.

• Direct trustee-to-trustee rollovers from eligible Roth IRAs to designated Roth accounts are permitted and treated as rollover contributions.
• An "eligible Roth IRA" is the taxpayer's only Roth IRA for the taxable year (with defined exceptions) and must meet a balance limit tied to a statutory amount.
• The full rolled-in amount is treated as principal (investment in the contract) in the receiving designated Roth account; earnings are accounted for separately.
• Clarifies how the 5-year/nonexclusion-period is determined and allows assigning the original contribution year when automatic portability supplies that information.
• Applies to amounts paid or distributed after enactment, so future rollovers will follow the new rules.
• Reduces tax and timing uncertainty when consolidating Roth accounts into employer plans, but requires recordkeeping by providers and plan administrators.
• Does not change tax rates or create new tax on rollovers; it changes how rollovers are classified and how the 5-year rule is applied.
• Helps preserve an individual's prior Roth contribution timing for qualified-distribution purposes when moving funds into a workplace Roth account.