Legislative History Defines the Roth IRA
Over the past 20 years, 20 federal laws have had an impact on the Roth IRA, making it what it is today. The Roth IRA and Roth-like concepts continue to surface in legislative debates at both the federal and state levels as Congress continues to focus on enhancing retirement savings vehicles. Some state governments have even worked to increase Roth IRA saving with state-sponsored private-sector retirement plan programs—and many are still getting started. Regardless, it’s clear that the Roth IRA is here to stay .
Listed below are some of the more significant legislative developments affecting the Roth IRA since the Taxpayer Relief Act of 1997 created it.
Tax Technical Corrections Act of 1998
Defined the 5-year period for qualified distributions.
Created the early distribution penalty tax rules for Roth IRA conversions and revised the conversion income rules.
Created Roth IRA distribution ordering rules.
Amended and clarified the modified adjusted gross income (MAGI) rules for Roth IRA contributions.
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
Increased contribution limits and created catch-up contributions.
Provided for retirement plan and IRA contribution tax credits.
Created qualified Roth contribution programs in 401(k) plans, with rollover availability to Roth IRAs.
Katrina Emergency Tax Relief Act of 2005, Gulf Opportunity Zone Act of 2005
Allowed victims of Hurricanes Rita, Katrina, or Wilma favorable tax treatment for certain retirement plan and IRA distributions and rollovers, and waived the early distribution penalty tax for these disaster victims.
Tax Increase Prevention and Reconciliation Act of 2005
Eliminated the $100,000 income limitation and married single filer restriction for Roth IRA conversions, beginning 2010.
Pension Protection Act of 2006 (PPA)
Expanded rollovers from retirement plans to Roth IRAs.
Indexed the income limits for eligibility for Roth IRA contributions.
Allowed penalty-free distributions for certain military reservists and the opportunity to later recontribute the amount.
Provided for qualified charitable distributions, tax-free, from IRAs.
Tax Relief and Health Care Act of 2006
Allowed for a one-time direct transfer of IRA assets to a health savings account.
Heroes Earnings Assistance and Relief Tax Act of 2008
Made the PPA provisions related to qualified reservists permanent.
Allowed certain military-related death payments to be rolled over tax-free to RothIRAs.
Emergency Economic Stabilization Act of 2008
Allowed rollovers of Exxon Valdez oil spill litigation payments.
Expanded tax relief to victims of the Midwestern disaster area.
Consolidated Appropriations Act of 2016
Made qualified charitable distributions permanent.
Disaster Tax Relief and Airport and Airway Extension Act of 2017
Provided relief for victims of Hurricanes Harvey, Irma, and Maria.
Tax Cuts and Jobs Act of 2017
Eliminated recharacterizations of Roth IRA conversions and retirement plan-to-Roth IRA rollovers.
Reduced AGI threshold from 10% to 7.5% for the qualified medical expense penalty tax exception, effective only for 2017 and 2018.
Provided relief for victims of California wildfires.
Provided rollover relief for returns of improper IRS levies.
Extended the 60-day rollover period for retirement plan loan offset amounts due to plan termination or severance from employment.
