Congress Attack on IRA/401k Plans – Please join YouTube Live Today (Friday 9/24) at 11 am Pacific/2 pm Eastern5 Replies
Top ForumsPrivate: My Community Webinars, Mega Backdoor Roth Solo 401kSeptember 24, 2021 at 7:07 am
Please join YouTube Live Today (Friday 9/24) at 11 am Pacific/2 pm Eastern
Top ForumsPrivate: My Community Webinars, Mega Backdoor Roth Solo 401k
Top ForumsIRAs and 401k plans Under Attack – Act Now!September 24, 2021 at 11:00 am
Based on my reading of the FULL TEXT of the bill, it does affect Solo 401k plans wrt Accredited Investments. I have uploaded the pdf of the full text here:
Section 138312 of the bill references section 408 of the IRS Tax code which defines the restrictions on an IRA. But section 408(c) states that employer plans are considered as “Individual Retirement Account” for the purpose of this section.
Would like to hear your thoughts on this.
Top ForumsSolo 401k, Rollover Funds into Solo 401kSeptember 24, 2021 at 12:16 pm
While the proposed bill does not reference 401k plans, it is unclear if this bill, if it even passes, would apply to solo 401k plans. The passage of the proposed bill would require approval by both the house and the senate and the president’s signature.
The proposed bill section solely references IRAs and the section is titled “Sec. 13812. Prohibition of IRA Investments on Account Holder’s Status”. The title does not reference 401k plans or qualified plans for that matter, and the text itself only references IRAs. Here is the full text of this section:
The bill prohibits an IRA from holding any security if the issuer of the security requires the IRA
owner to have certain minimum level of assets or income, or have completed a minimum level of
education or obtained a specific license or credential. For example, the legislation prohibits IRAs from holding investments which are offered to accredited investors because those
investments are securities that have not been registered under federal securities laws. IRAs
holding such investments would lose their IRA status. This section generally takes effect for tax
years beginning after December 31, 2021, but there is a 2-year transition period for IRAs already
holding these investments.
In sum, until the bill passes we can only rely on what has been proposed thus far which clearly solely identifies IRAs with respect to the private investment restriction section of the pending bill.
Top ForumsIRAs and 401k plans Under Attack – Act Now!September 24, 2021 at 12:30 pm
That is not the full-text of the bill (which is 881 pages), you are only pointing to the Summary of the bill (which is only 18 pages). Please read the full text in the PDF I linked above (also sent to you separately via email). I am quoting an excerpt from the full text:
15 SEC. 138312. PROHIBITION OF IRA INVESTMENTS CONDI-
16 TIONED ON ACCOUNT HOLDER’S STATUS.
17 (a) IN GENERAL.—Subsection (a) of section 408 is
18 amended by adding at the end the following new para-
20 ‘‘(7) No part of the trust funds will be invested
21 in any security if the issuer of such security (or any
22 other person specified by the Secretary) requires the
23 individual on whose behalf the trust is maintained to
24 make a representation to the issuer or such other
25 person that such individual—
Now, based on my reading of Section 408, Employer plans are considered “Individual Retirement Account” for the purpose of section 408.
“A trust created or organized in the United States by an employer for the exclusive benefit of his employees or their beneficiaries, or by an association of employees (which may include employees within the meaning of section 401(c)(1)) for the exclusive benefit of its members or their beneficiaries, shall be treated as an individual retirement account (described in subsection (a)), but only if the written governing instrument creating the trust meets the following requirements:”
Top ForumsSolo 401k, Rollover Funds into Solo 401kSeptember 24, 2021 at 12:48 pm
Code 408 deals specifically with IRAs. Whereas 401k plans full under Code 401 and 401(k) is a subset of Code 401. As explained earlier, until the bill is finalized and approved we will not know for certain if solo 401k plans will be impacted by the private investment part of the bill but the current pending bill certainly implies that qualified plans including solo 401k plans may not be impacted.
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