Bill · S. 5040· Senate(119-S-5040)
A bill to amend the Internal Revenue Code of 1986 to impose limitations on high-income taxpayers with large retirement account balances.
- Introduced
- 7/21/2026
- Last activity
- 7/21/2026 — Read twice and referred to the Committee on Finance.
- Sponsored by
- Ron Wyden
- Cosponsors
- None
- Introduced
- In Committee
What this bill would do
This bill aims to amend the Internal Revenue Code of 1986 to place limitations on high-income taxpayers who possess large retirement account balances. It establishes a cap on annual contributions to various retirement plans once a specific balance threshold is met. Additionally, the bill increases the minimum required distributions for these individuals. To facilitate this, the legislation allows for certain distribution rights and provides exceptions to the 10 percent additional tax on early distributions. These changes are intended to target specific high-income groups with significant aggregate account balances.
Yes
Does this raise taxes on the highest earners?+7
The bill imposes contribution limits and increased required distributions on high-income taxpayers with large retirement balances.
Does this make the government pay for what it commits to?+3
The bill increases required distributions from large retirement accounts, which may increase federal tax revenue through higher current income.
Is this likely to lift people out of poverty?+2
By targeting extreme wealth concentration in retirement accounts, the bill aligns with broader goals of economic redistribution.
The opposite· 3 of 4
Would high-income households be better off under this?-7
High-income earners face new limits on retirement contributions and higher mandatory distribution requirements.
Would people with substantial wealth be better off under this?-7
The bill specifically targets individuals with large aggregate retirement balances by restricting further tax-advantaged accumulation.
Would people over 65 be better off under this?-4
The bill mandates higher required distributions which may alter long-term retirement planning and liquidity for high-balance account holders.
Who it would affect, and how
Potential Positive Impacts for People
-
Increased Distribution Flexibility: The bill allows certain taxpayers to elect to receive distributions from their accounts earlier than standard rules might dictate, which can help them meet the new distribution requirements (Section s 2(b)(1)(A) and (B)).
-
Tax Relief on Early Distributions: Individuals subject to these new rules are exempt from the 10 percent additional tax on early distributions, provided the distributions do not exceed the amount required under the new rules (Section 2(b)(2)).
-
Protection for Specific Assets: For those with Employee Stock Ownership Plans, the increase in required distributions does not apply to portions invested in employer securities that are not readily tradable on an established securities market (Section 2(a)(4)(B)(iii)(I)).
Potential Negative Impacts for People
-
Contribution Restrictions: High-income taxpayers will face limits on how much they can contribute to their retirement plans once their aggregate vested balances reach a specific dollar amount (Section 1(a)).
-
Increased Distribution Obligations: Taxpayers meeting the high-income and large account balance criteria will be required to take higher minimum distributions from their retirement plans (Section 2(a)(3)).
-
Higher Withholding Rates: Certain distributions required under these new rules will be treated as nonperiodic distributions, resulting in a 37 percent withholding rate rather than the standard 10 percent (Section 2(b)(3)(A)).
-
Taxpayer Categorization: The bill applies these rules to specific income thresholds, such as $225,000 for married individuals not filing jointly or $450,000 for married individuals filing jointly (Section 1(b)(4)(B)).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Demographic And Interest Groups
- Good For High Income Households-7Good For High Net Worth Individuals-7Good For Seniors-4Good For Retirees-3
- Economy And Finance
- Increases Wealthy Taxes+7Improves Fiscal Responsibility+3
- Social Issues And Justice
- Improves Poverty Reduction+2
- 7/21/2026
- Read twice and referred to the Committee on Finance.
- Introduced in Senate
One bill Congress.gov lists as related to this one — companions in the other chamber, earlier versions, and bills this one absorbed or was folded into.