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WASHINGTON – The House of Representatives today passed bipartisan legislation that includes language by Rep. Virginia Foxx, R-N.C., to correct a technical limitation preventing the rollover of tax-deferred retirement funds into existing SIMPLE IRA accounts.

The language is part of the Protecting Americans from Tax Hikes Act, which provides permanent tax relief for American families, college students, charities, small businesses and enterprises on the forefront of innovation.

“Individuals should be able to consolidate their retirement funds in a way that best meets their needs, and I’m pleased this legislation includes language that will simplify retirement planning and ensure a complex tax code does not prevent sensible financial planning decisions,” said Foxx. “This legislation is an important first step on the long road to ensuring our tax system works for Americans, not against them.”

SIMPLE IRAs face a 25 percent early withdrawal penalty during the first two years of their existence compared to 10 percent for other IRAs. In order to prevent account holders from unknowingly rolling their IRA funds into SIMPLE IRAs and being surprised by an increased early withdrawal penalty, current law prohibits rolling funds over into a SIMPLE IRA from other retirement accounts. However, SIMPLE IRAs have the same early withdrawal penalty as other IRAs after that initial two-year period, and consumers and financial planners have struggled with the rollover restrictions as they attempt to consolidate accounts. Foxx’s language allows for rollovers into SIMPLE IRA accounts that have met the two-year threshold. 

By making a number of temporary tax provisions permanent, the Protecting Americans from Tax Hikes Act delivers certainty to American taxpayers and makes it easier for employers to plan ahead, hire new workers, grow their businesses and invest in their communities. 

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U.S. Rep. Virginia Foxx represents North Carolina’s 5th Congressional District and is the elected Republican Conference Secretary. Dr. Foxx is the chair of the House Education and the Workforce Subcommittee on Higher Education and serves as Vice Chair of the House Rules Committee.