New Data Shows Prevalence of Mega-Retirement Accounts with Balances in the Hundreds of Millions of Dollars; Neal-Wyden Proposal Would Prevent Abuse of Taxpayer-Subsidized Account
WASHINGTON, DC—House Ways and Means Committee Ranking Member Richard E. Neal (D-MA) and Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced new legislation today to prevent ultra-wealthy individuals from abusing tax-preferred retirement accounts such as IRAs and 401(k)s as tax shelters. The proposal would prevent the accumulation of massive fortunes inside mega-retirement accounts by requiring ultra-wealthy individuals to take distributions from accounts with balances over $10 million. The bill would make no changes to retirement accounts for middle-class savers.
In conjunction with their bill, Neal and Wyden also released new data from the Joint Committee on Taxation (JCT) on the prevalence of mega-retirement accounts. JCT estimates that at the end of 2024:
- Just 208 individuals held a total of $85.1 billion in tax-sheltered retirement accounts, and those accounts had an average balance of $409 million each.
- More than 32,000 individuals held more than $10 million each in tax-sheltered retirement accounts, with an average balance of $17 million.
“Our retirement savings system is built on incentives to help workers achieve financial security after a lifetime of work—not on loopholes for the wealthiest to exploit,” Neal said. “Allowing a handful of individuals to accumulate staggering fortunes while still receiving taxpayer subsidies was never what Congress intended. At a time when millions of workers still struggle to save enough for retirement, there is no justification for taxpayer-subsidized multi-million-dollar accounts. Closing these loopholes is a matter of basic tax fairness, and Congress must restore this savings vehicle to its intended purpose.”
“Tax-preferred retirement accounts are not supposed to be a loophole for the ultra-rich to shelter immense fortunes, they’re a lifeline for working Americans who may not otherwise have a dignified retirement,” Wyden said. “It’s especially outrageous to see these mega-retirement accounts building up at a time when half of American workers don’t have access to a workplace retirement plan at all. Individuals worth hundreds of millions or billions of dollars do not need any taxpayer subsidy to save, so we need to close this loophole and focus the taxpayer subsidies for retirement savings on the people who really need the help.”
In addition to requiring minimum distributions, Neal and Wyden’s bill would prohibit further contributions to a Roth or traditional IRA if the total of an individual’s IRA and defined contribution retirement plan vested account balances exceeds $10 million for the prior year.
A comprehensive summary is available here and the text of the bill is here.
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