II 

118TH CONGRESS 

2D SESSION S. 5422 

To amend the Internal Revenue Code of 1986 to provide a contribution 

limit and increased minimum distributions for certain retirement plans 

with large account balances. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 4, 2024 

Mr. MERKLEY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a contribution limit and increased minimum distributions 

for certain retirement plans with large account balances. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Retirement Fairness 

5 Act’’. 

6 SEC. 2. CONTRIBUTION LIMIT AND INCREASED MINIMUM 

7 DISTRIBUTIONS FOR CERTAIN RETIREMENT 

8 PLANS WITH LARGE ACCOUNT BALANCES. 

9 (a) CONTRIBUTION LIMIT.— 


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1 (1) IN GENERAL.—Subpart A of part I of sub2 chapter D of chapter 1 of the Internal Revenue Code 

3 of 1986 is amended by adding at the end the fol4 lowing: 

5 ‘‘SEC. 409B. CONTRIBUTION LIMIT ON CERTAIN RETIRE6 MENT PLANS WITH LARGE ACCOUNT BAL7 ANCES. 

8 ‘‘(a) GENERAL RULE.—Notwithstanding any other 

9 provision of this title, no applicable annual additions shall 

10 be made by, or on behalf of, an individual for the taxable 

11 year to any applicable retirement plan to the extent such 

12 applicable annual additions exceed the excess (if any) of— 

13 ‘‘(1) the applicable dollar amount for the tax14 able year, over 

15 ‘‘(2) the aggregate balances to the credit of the 

16 individual (whether as a participant, owner, or bene17 ficiary) in all applicable retirement plans (deter18 mined as of the close of the calendar year preceding 

19 the calendar year in which the taxable year begins). 

20 ‘‘(b) RULES RELATING TO CONTRIBUTION LIMITA21 TIONS.— 

22 ‘‘(1) PLANS OTHER THAN CERTAIN IRAS.— 

23 ‘‘(A) IN GENERAL.—Except as provided in 

24 paragraph (2), applicable annual additions in 

25 excess of the limitation under subsection (a) 


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1 shall be treated for purposes of this title in the 

2 same manner as excess deferrals are treated 

3 under section 402(g). 

4 ‘‘(B) SPECIAL RULE FOR AFTER TAX CON5 TRIBUTIONS.—If, without regard to this para6 graph, any portion of an applicable annual ad7 dition to which subparagraph (A) applies with 

8 respect to an individual is not excludable from 

9 gross income of the individual (or no deduction 

10 is allowable to the individual with respect to 

11 such portion), such portion shall not be— 

12 ‘‘(i) includible in gross income by rea13 son of the application of subparagraph (A), 

14 or 

15 ‘‘(ii) taken into account in computing 

16 the investment in the contract for purposes 

17 of section 72. 

18 ‘‘(2) SPECIAL RULE FOR IRAS.— 

19 ‘‘(A) IN GENERAL.—In the case of an ap20 plicable retirement plan which is an individual 

21 retirement plan (other than a simplified em22 ployee pension under section 408(k) or a simple 

23 retirement account under section 408(p)), any 

24 applicable annual addition to such plan in ex25 cess of the limitation under subsection (a) shall 


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1 be treated for purposes of sections 408 and 

2 408A as a contribution for the taxable year in 

3 excess of the maximum amount allowable as a 

4 deduction under section 219 for the taxable 

5 year. 

6 ‘‘(B) AFTER TAX CONTRIBUTIONS.—In the 

7 case of applicable annual additions in excess of 

8 the limitation under subsection (a)— 

9 ‘‘(i) rules similar to the rules of para10 graph (1)(B) shall apply to any such addi11 tions which are treated as designated non12 deductible contributions under section 

13 408(o), and 

14 ‘‘(ii) section 408A(d)(2)(C) shall 

15 apply to any such additions which are to a 

16 Roth IRA (and to any net income allocable 

17 to such additions). 

18 For purposes of clause (ii), distributions from a 

19 Roth IRA shall be treated as first made from 

20 amounts described in clause (ii) and section 

21 408A(d)(2)(C) shall be applied in the same 

22 manner as if there were a distribution of a con23 tribution described in section 408(d)(4) (with24 out regard to whether such distribution is time25 ly made). 


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1 ‘‘(3) ALLOCATION OF EXCESS APPLICABLE AN2 NUAL ADDITIONS.—If the applicable dollar amount 

3 for a taxable year exceeds the amount described in 

4 subsection (a)(2), the taxpayer may, in such form 

5 and manner as the Secretary may prescribe, allocate 

6 such excess to applicable annual additions to each 

7 applicable retirement plan in such manner as the 

8 taxpayer chooses. 

9 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur10 poses of this section— 

11 ‘‘(1) APPLICABLE ANNUAL ADDITION.— 

12 ‘‘(A) IN GENERAL.—The term ‘applicable 

13 annual addition’ means any of the following 

14 made to or on behalf of an individual: 

15 ‘‘(i) An annual addition (within the 

16 meaning of section 415(c)(2)). 

17 ‘‘(ii) Any contribution to an individual 

18 retirement plan, including any employer or 

19 employee contribution to a simplified em20 ployee pension under section 408(k) or a 

21 simple retirement account under section 

22 408(p). 

23 ‘‘(iii) Any deferral under an eligible 

24 deferred compensation plan described in 

25 section 457(b) which is maintained by an 


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1 eligible employer described in section 

2 457(e)(1)(A). 

3 ‘‘(B) ROLLOVER CONTRIBUTIONS DIS4 REGARDED.—A rollover contribution under sec5 tion 402(c), 403(b)(8), 408(d)(3)(A)(ii), or 

6 457(e)(16) shall not be treated as an annual 

7 addition. 

8 ‘‘(2) APPLICABLE DOLLAR AMOUNT.— 

9 ‘‘(A) IN GENERAL.—The term ‘applicable 

10 dollar amount’ means $4,000,000. 

11 ‘‘(B) ADJUSTMENT FOR INFLATION.—In 

12 the case of any taxable year beginning after 

13 2025, the $4,000,000 amount under subpara14 graph (A) shall be increased by an amount 

15 equal to the product of— 

16 ‘‘(i) such amount, and 

17 ‘‘(ii) the cost-of-living adjustment 

18 under section 1(f)(3) for the calendar year 

19 in which such taxable year begins, deter20 mined by substituting ‘calendar year 2024’ 

21 for ‘calendar year 2016’ in subparagraph 

22 (A)(ii) thereof. 

23 ‘‘(C) ROUNDING.—If any amount as ad24 justed under subparagraph (B) is not a mulVerDate Sep 11 2014 22:51 Dec 10, 2024 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S5422.IS S5422

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1 tiple of $1,000, such amount shall be rounded 

2 to the next lowest multiple of $1,000. 

3 ‘‘(3) APPLICABLE RETIREMENT PLAN.—The 

4 term ‘applicable retirement plan’ means— 

5 ‘‘(A) a defined contribution plan to which 

6 section 401(a) or 403(a) applies, 

7 ‘‘(B) an annuity contract under section 

8 403(b), 

9 ‘‘(C) an eligible deferred compensation 

10 plan described in section 457(b) which is main11 tained by an eligible employer described in sec12 tion 457(e)(1)(A), or 

13 ‘‘(D) an individual retirement plan. 

14 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 

15 such regulations and guidance as are necessary or appro16 priate to carry out the purposes of this section, including 

17 regulations or guidance that provide for the application 

18 of this section and section 4974(e) in the case of plans 

19 with a valuation date other than the last day of a calendar 

20 year.’’. 

21 (2) CONFORMING AMENDMENTS.— 

22 (A) The table of contents for subpart A of 

23 part I of subchapter D of chapter 1 of such 

24 Code is amended by adding after the item relat25 ing to section 409A the following new item: 


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‘‘Sec. 409B. Contribution limit on certain retirement plans with large account 

balances.’’. 

1 (B) Section 402(g) of such Code is amend2 ed by adding at the end the following new para3 graph: 

4 ‘‘(9) AGGREGATE LIMITATION.—For additional 

5 limitation on contributions to certain plans with 

6 large account balances, see section 409B.’’. 

7 (C) Section 403(b)(1) of such Code is 

8 amended by adding at the end the following 

9 new sentence: ‘‘For additional limitation on 

10 contributions to certain plans with large ac11 count balances, see section 409B.’’ 

12 (D) Section 408(r) of such Code is amend13 ed by adding at the end the following new para14 graph: 

15 ‘‘(3) For additional limitation on contributions 

16 to certain plans with large account balances, see sec17 tion 409B.’’. 

18 (E) Section 457(c) of such Code is amend19 ed by adding at the end the following new sen20 tence: ‘‘For additional limitation on contribu21 tions to certain plans with large account bal22 ances, see section 409B.’’. 

23 (b) EXCISE TAX ON EXCESS ANNUAL ADDITIONS.— 


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1 (1) IN GENERAL.—Subsection (a) of section 

2 4973 of the Internal Revenue Code of 1986 is 

3 amended— 

4 (A) by striking ‘‘or’’ at the end of para5 graph (5), 

6 (B) by inserting ‘‘or’’ after the comma at 

7 the end of paragraph (6), and 

8 (C) by inserting after paragraph (6) the 

9 following new paragraph: 

10 ‘‘(7) an applicable retirement plan (within the 

11 meaning of section 409B(c)(3)),’’. 

12 (2) EXCESS CONTRIBUTIONS TO APPLICABLE

13 RETIREMENT PLANS.—Section 4973 of such Code is 

14 amended by adding at the end the following new 

15 subsection: 

16 ‘‘(i) EXCESS CONTRIBUTIONS TO APPLICABLE RE17 TIREMENT PLANS.—For purposes of this section, in the 

18 case of applicable retirement plans (within the meaning 

19 of section 409B(c)(3)), the term ‘excess contributions’ 

20 means, with respect to any taxable year, the sum of— 

21 ‘‘(1) the excess of the applicable annual addi22 tions (within the meaning of section 409B(c)(1)) to 

23 such plans over the limitation under section 409B(a) 

24 for such taxable year, and 

25 ‘‘(2) the lesser of— 


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1 ‘‘(A) the amount determined under this 

2 subsection for the preceding taxable year, re3 duced by the aggregate distributions from such 

4 plans for the taxable year (including distribu5 tions required under section 4974(e)) to the ex6 tent not contributed in a rollover contribution 

7 to another eligible retirement plan in accord8 ance with section 402(c), 403(b)(8), 457(e)(16), 

9 408(d)(3), or 408A(d)(3), or 

10 ‘‘(B) the amount (if any) by which the 

11 amount determined under section 409B(a)(2) 

12 for the taxable year exceeds the applicable dol13 lar amount under section 409B(c)(2) for the 

14 taxable year.’’. 

15 (3) CONFORMING AMENDMENTS.—Subsection 

16 (a) of section 4973 of such Code is amended— 

17 (A) by striking ‘‘accounts or annuities’’ 

18 and inserting ‘‘accounts, annuities, or plans’’, 

19 and 

20 (B) by striking ‘‘account or annuity’’ and 

21 inserting ‘‘account, annuity, or plan’’. 

22 (c) INCREASE IN MINIMUM REQUIRED DISTRIBU23 TIONS.— 


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1 (1) IN GENERAL.—Section 4974 of the Internal 

2 Revenue Code of 1986 is amended by adding at the 

3 end the following new subsection: 

4 ‘‘(f) INCREASE IN MINIMUM REQUIRED DISTRIBU5 TIONS FOR PAYEES WITH LARGE AGGREGATE ACCOUNT

6 BALANCES.— 

7 ‘‘(1) IN GENERAL.—If this subsection applies to 

8 a payee for any taxable year— 

9 ‘‘(A) all qualified retirement plans and eli10 gible deferred compensation plans of the payee 

11 which are applicable retirement plans taken into 

12 account in computing the excess described in 

13 paragraph (2)(A) shall be treated as 1 plan 

14 solely for purposes of applying this section to 

15 the increase in minimum required distributions 

16 for the taxable year described in subparagraph 

17 (B), and 

18 ‘‘(B) the minimum required distributions 

19 under this section for all plans treated as 1 

20 plan under subparagraph (A) with respect to 

21 such payee for the taxable year shall be in22 creased by the excess (if any) of— 

23 ‘‘(i) the excess described in paragraph 

24 (2)(A), over 


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1 ‘‘(ii) the sum of the minimum re2 quired distributions (determined without 

3 regard to this subsection) for all such 

4 plans. 

5 ‘‘(2) APPLICATION.—This subsection shall 

6 apply to a payee for a taxable year— 

7 ‘‘(A) if the aggregate balances to the credit 

8 of the payee (whether as a participant, owner, 

9 or beneficiary) in all applicable retirement plans 

10 (determined as of the close of the calendar year 

11 preceding the calendar year in which the tax12 able year begins) exceed the applicable dollar 

13 amount for the calendar year in which the tax14 able year begins, and 

15 ‘‘(B) without regard to whether amounts 

16 with respect to the payee are otherwise required 

17 to be distributed under section 401(a)(9), 

18 403(b)(10), 408(a)(6), 408(b)(3), or 457(d)(2). 

19 ‘‘(3) COORDINATION AND ALLOCATION.— 

20 ‘‘(A) MINIMUM DISTRIBUTION REQUIRE21 MENTS.—If this subsection applies to a payee 

22 for any taxable year— 

23 ‘‘(i) this section shall apply first to 

24 minimum required distributions deter25 mined without regard to this subsection 


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1 and then to any increase in minimum re2 quired distributions by reason of this sub3 section, and 

4 ‘‘(ii) nothing in this subsection shall 

5 be construed to affect the amount of any 

6 minimum required distribution determined 

7 without regard to this subsection or the 

8 plan or plans from which it is required to 

9 be distributed from. 

10 ‘‘(B) ALLOCATION OF INCREASE IN MIN11 IMUM REQUIRED DISTRIBUTIONS.—The tax12 payer may, in such form and manner as the 

13 Secretary may prescribe, allocate any increase 

14 in minimum required distributions by reason of 

15 this subsection to applicable retirement plans 

16 treated as 1 plan under subparagraph (A) in 

17 such manner as the taxpayer chooses. 

18 ‘‘(4) TREATMENT OF ROTH IRAS.— 

19 ‘‘(A) IN GENERAL.—Notwithstanding sec20 tion 408A(c)(5)— 

21 ‘‘(i) the aggregate balance to the cred22 it of a payee of any Roth IRA shall be 

23 taken into account for purposes of this 

24 subsection, and 


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1 ‘‘(ii) distributions from a Roth IRA 

2 may be taken into account in determining 

3 whether the required increase in minimum 

4 required distributions by reason of this 

5 subsection has been satisfied. 

6 ‘‘(B) INCLUSION IN INCOME OF DISTRIB7 UTED EARNINGS.—If any distribution from a 

8 Roth IRA is taken into account under subpara9 graph (A)(ii), then, notwithstanding section 

10 408A(d)(5), the portion of such distribution 

11 which is properly allocable to net income on 

12 contributions to the Roth IRA shall not be 

13 treated as a qualified distribution and shall be 

14 included in gross income of the payee. 

15 ‘‘(5) PHASE-IN FOR TAXPAYERS WITH EXCESS

16 BALANCES FOR TAXABLE YEAR BEGINNING IN

17 2025.— 

18 ‘‘(A) IN GENERAL.—If there is an excess 

19 described in paragraph (2)(A) for the first tax20 able year of a taxpayer beginning during 2025 

21 (in this paragraph referred to as the ‘historic 

22 excess’), then the amount taken into account 

23 under paragraph (1)(B)(i) for such first taxable 

24 year and each subsequent taxable year to which 

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1 cess described in paragraph (2)(A) for each 

2 such taxable year, be equal to— 

3 ‘‘(i) in the case of such first taxable 

4 year, 10 percent of the historic excess, and 

5 ‘‘(ii) in the case of each subsequent 

6 taxable year to which this paragraph ap7 plies, the sum of— 

8 ‘‘(I) 100 percent of amount (if 

9 any) by which the excess described in 

10 paragraph (2)(A) for such taxable 

11 year exceeds the adjusted historic ex12 cess for such taxable year, plus 

13 ‘‘(II) 10 percent of the adjusted 

14 historic excess for such taxable year 

15 (100 percent of such adjusted historic 

16 excess for any taxable year if it is less 

17 than $1,000). 

18 ‘‘(B) ADJUSTED HISTORIC EXCESS.—For 

19 purposes of this paragraph, the term ‘adjusted 

20 historic excess’ means, with respect to any tax21 able year, the lesser of— 

22 ‘‘(i) the excess (if any) of the— 

23 ‘‘(I) the historic excess, over 

24 ‘‘(II) the aggregate amount of 

25 the historic excess taken into account 


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1 under clauses (i) and (ii)(II) of sub2 paragraph (A) for all preceding tax3 able years, or 

4 ‘‘(ii) the aggregate balances to the 

5 credit of the payee (whether as a partici6 pant, owner, or beneficiary) in all applica7 ble retirement plans (determined as of the 

8 close of the calendar year preceding the 

9 calendar year in which such taxable year 

10 begins) in excess of $4,000,000. 

11 ‘‘(C) TAXABLE YEARS TO WHICH PARA12 GRAPH APPLIES.—This paragraph shall not 

13 apply to— 

14 ‘‘(i) any taxable year if the aggregate 

15 amount of the historic excess taken into 

16 account under clauses (i) and (ii)(II) of 

17 subparagraph (A) for all preceding taxable 

18 years equals such historic excess, or 

19 ‘‘(ii) the first taxable year in which 

20 the aggregate balances to the credit of the 

21 payee (whether as a participant, owner, or 

22 beneficiary) in all applicable retirement 

23 plans (determined as of the close of the 

24 calendar year preceding the calendar year 

25 in which such taxable year begins) are 


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1 $4,000,000 or less and any subsequent 

2 taxable year. 

3 ‘‘(6) DEFINITIONS.—For purposes of this sub4 section, any term used in this subsection which is 

5 also used in section 409B shall have the same mean6 ing as when such term is used in such section.’’. 

7 (2) EXCEPTION FROM 10 PERCENT ADDITIONAL

8 TAX ON EARLY DISTRIBUTIONS.—Section 72(t)(2) of 

9 such Code is amended by adding at the end the fol10 lowing new subparagraph: 

11 ‘‘(O) DISTRIBUTIONS OF EXCESS BAL12 ANCES.—Distributions from applicable retire13 ment plans (within the meaning of section 

14 409B) to the extent such distributions during 

15 the taxable year do not exceed the amount (if 

16 any) by which— 

17 ‘‘(i) the amount determined under 

18 section 409B(a)(2) for the taxable year, 

19 exceeds 

20 ‘‘(ii) the applicable dollar amount 

21 under section 409B(c)(2) for the preceding 

22 taxable year.’’. 

23 (d) REPORTING REQUIREMENTS.—Section 6047 of 

24 the Internal Revenue Code of 1986 is amended by redesigVerDate Sep 11 2014 22:51 Dec 10, 2024 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\S5422.IS S5422

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1 nating subsection (h) as subsection (i) and by inserting 

2 after subsection (g) the following: 

3 ‘‘(h) REPORTING RELATING TO AGGREGATE CON4 TRIBUTION AND BALANCE LIMITS ON CERTAIN RETIRE5 MENT PLANS.—The Secretary shall require the plan ad6 ministrator or trustee of an applicable retirement plan (as 

7 defined in section 409B) to make such returns and reports 

8 to the Secretary and participants and beneficiaries as are 

9 necessary to apply the aggregate limits on contributions 

10 imposed by section 409B and the increases in minimum 

11 required distributions required by section 4974(e). If the 

12 account balance of a plan as of the close of a calendar 

13 year is not otherwise required under this title to be re14 ported to a participant, a beneficiary, or the Secretary, 

15 such requirements shall include a requirement that the 

16 plan administrator or trustee shall notify the participant, 

17 the beneficiary, or the Secretary of such account balance 

18 at such time and in such manner as the Secretary may 

19 prescribe.’’. 

20 (e) EFFECTIVE DATES.— 

21 (1) IN GENERAL.—The amendments made by 

22 this section shall apply to taxable years beginning 

23 after December 31, 2024. 


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1 (2) PLAN REQUIREMENTS.—The amendments 

2 made by subsection (d) shall apply to years begin3 ning after December 31, 2024. 

4 SEC. 3. TRANSFER OF AMOUNTS TO TRUST FUNDS. 

5 There are hereby appropriated to each of— 

6 (1) the Federal Old-Age and Survivors Trust 

7 Fund, and 

8 (2) the Federal Disability Insurance Trust 

9 Fund, 

10 established under section 201 of the Social Security Act 

11 (42 U.S.C. 401) amounts equal to 50 percent of the in12 crease in revenues to the Treasury by reason of the appli13 cation of section 2. 

Æ 


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