This bill amends the Internal Revenue Code to restrict IRA contributions and mandate increased minimum distributions for high-income taxpayers with total retirement account balances exceeding $10 million.
Ron Wyden
Senator
OR
This bill amends the Internal Revenue Code to impose new restrictions on high-income taxpayers with large retirement account balances. Starting in 2027, it limits additional IRA contributions for high-income earners with over $10 million in total retirement savings. Furthermore, beginning in 2034, it mandates increased minimum required distributions for these individuals to accelerate the drawdown of large retirement accounts.
New Retirement Rules Set $10 Million Cap on IRA Balances and Force Massive Payouts for High Earners
If you’ve been using your retirement accounts as a long-term fortress for wealth, the rules of the game are about to change. This bill introduces a hard ceiling of $10 million on total retirement savings for high-income earners. Starting in 2027, if your combined balances in 401(k)s, IRAs, and other accounts hit that eight-figure mark, you’re officially cut off from making any more IRA contributions. It’s a major shift designed to stop tax-advantaged accounts from becoming infinite wealth-building machines for the top tier of earners—specifically those making over $400,000 (single) or $450,000 (jointly).
The $10 Million Ceiling
Under Section 409B, the government is essentially saying "enough is enough" when it comes to tax-free growth. If you are a high-income taxpayer and your total vested balance across all accounts—from your old 401(k) to your current Roth IRA—reaches $10 million, your ability to add more to an IRA drops to zero. For example, a tech executive with $9.9 million in total savings would only be allowed to contribute $100,000 more before being capped. If they ignore this and keep contributing, they’ll face a 6% excise tax penalty every single year that the excess money stays in the account. This isn't just a one-time slap on the wrist; it’s a recurring fee that makes over-saving a very expensive mistake.
Mandatory Cash-Outs
It gets even more intense starting in 2034. The bill doesn't just stop you from putting money in; it forces you to take it out. If you’re in that high-income bracket and your balance is over the $10 million threshold, you’ll be required to take a "super-sized" distribution. If your balance is between $10 million and $20 million, you have to withdraw 50% of the amount over the cap. If you’re lucky enough to have over $20 million, the rules get even stricter: you have to pull out the lesser of your total excess or your entire Roth balance first. Imagine a business owner who sold their company and has $25 million in a SEP-IRA; they could be looking at a forced withdrawal of millions in a single year, all taxed at a mandatory 37% withholding rate.
Complexity and the Fine Print
While this mostly targets the ultra-wealthy, the administrative ripple effects will hit everyone’s financial advisors. Calculating these "applicable Roth excess amounts" and coordinating across multiple 401(k) and 403(b) plans is a math nightmare that will likely lead to higher accounting fees for anyone near these limits. There are some protections—for instance, you can’t be forced to liquidate shares in a private company held in an ESOP—but for most liquid assets, the government is demanding its cut sooner rather than later. By tying these thresholds to inflation starting in 2028, the bill ensures these limits don't accidentally trap middle-class savers decades from now, but for today’s high-flyers, the era of the unlimited IRA is coming to a close.