The New Spending Bill Brings changes to Roth I.R.A. and 401(k)

The $1.7 trillion federal spending bill signed today includes dozens of changes to retirement plans Roth I.R.A. and Roth 401(k). That’s how it will affect the employers and investors

retirement Roth I.R.A. 401(k)

The new spending bill changes how you save for retirement. Image:

The House has just passed the $1.7 trillion federal spending bill that new twists to both Roth individual retirement accounts and Roth 401(k)s.

The update makes it easier for employers to help their employees open emergency savings accounts, assists those repaying student loan debt, and gives more part-time workers access to retirement plans.

Under the 2022 Roth I.R.A. rules, you don’t have to start withdrawing money at age 72, unlike you do with regular I.R.A.s. Instead, you can allow the entire balance to keep growing until you actually need it. Roth 401(k)s would receive the same flexibility as Roth I.R.A.s starting in 2024 as well.

Additionally, the new rules give employers the option to let employees choose between putting the matching contributions in a Roth 401(k) or a regular 401(k) account. That allows employees to choose better income tax rates and make the most out of their savings.

Another change is that those who earn more than $145,000 will have to put the catch-up money into a Roth 401(k) starting in 2024, which means they’ll pay income taxes on it before making the deposit. Currently, you put the catch-up money away before you pay income taxes on it.

Finally, families with leftover 529 savings would be able to move the spare money to a Roth I.R.A. starting in 2024, without additional taxes or penalties. There is a $35,000 lifetime limit on these transfers per account beneficiary, though, and a few other restrictions.


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Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.