Pomeroy Bill Eases Rollover Rules

January 31, 2003 (PLANSPONSOR.com) - Taxpayers would be allowed to roll over money into a spouse's retirement savings account in another qualified plan or an IRA under a new Congressional bill.

Sponsor Rep. Earl Pomeroy (D-North Dakota) said his bill allowing couples to commingle their retirement savings funds would allow the couple to act “more as a single financial unit,” especially when one spouse is out of the workforce for a period of time, Washington-based legal publisher BNA reported

According to the BNA report, Pomeroy’s bill would also:

  • allow rollovers to inherited IRAs, avoiding situations in which nonspousal beneficiaries are forced to receive plan benefits -and tax liabilities- immediately after the death of the participant
  • expand automatic rollover provisions enacted in EGTRRA to allow employees leaving a job to have pension benefits rolled over into an IRA that has no ties to the former employer
  • allow for direct rollovers into Roth IRAs, eliminating the current requirement for participants to roll over savings to a traditional IRA and then to a Roth IRA
  • allow rollovers to Savings Incentive Matching Plans for Employees of Small Employers to come from plans other than SIMPLE plans
  • allow pension plans to accept up to $500 annually in “use it or lose it” monies that cannot be rolled over in flexible spending accounts from year to year
  • reduce vesting for nonelective employer contributions, like matching contributions, to 401(k) accounts from five years to three years.