Retirement Industry Trust Association pushes back against recent proposals by Congress that would prohibit IRAs from investing in most alternative assets and limit contributions
The Retirement Industry Trust Association (RITA) launched a “SAVE MY IRA” (https://ritaus.org/save-my-ira) campaign with the message to Congress: “Do not limit retirement savers’ choice.” RITA is urging its followers and associates to “Contact your elected officials in the United States House of Representatives and Senate and tell them you oppose limitations on IRA investment choice (Sections 138312 and 138314 of the House Reconciliation Bill).”
The website for Ways and Means Committee Democrats, U.S. House of Representatives (https://waysandmeans.house.gov), Subpart B – Other Provisions Relating to Individual Retirement Accounts Sec. 138312. Prohibition of IRA Investments Conditioned on Account Holder’s Status reads, “The bill prohibits an IRA from holding any security if the issuer of the security requires the IRA owner to have certain minimum level of assets or income, or have completed a minimum level of education or obtained a specific license or credential. For example, the legislation prohibits IRAs from holding investments which are offered to accredited investors because those investments are securities that have not been registered under federal securities laws. IRAs holding such investments would lose their IRA status. This section generally takes effect for tax years beginning after December 31, 2021, but there is a 2-year transition period for IRAs already holding these investments.”
The website for Ways and Means Committee Democrats, U.S. House of Representatives, Subpart B – Other Provisions Relating to Individual Retirement Accounts Sec. 138314. Prohibition of Investment of IRA Assets in Entities in Which the Owner Has a Substantial Interest reads, “To prevent self-dealing, under current law prohibited transaction rules, an IRA owner cannot invest his or her IRA assets in a corporation, partnership, trust, or estate in which he or she has a 50 percent or greater interest. However, an IRA owner can invest IRA assets in a business in which he or she owns, for example, one-third of the business while also acting as the CEO. The bill
adjusts the 50 percent threshold to 10 percent for investments that are not tradable on an established securities market, regardless of whether the IRA owner has a direct or indirect interest. The bill also prevents investing in an entity in which the IRA owner is an officer. Further, the bill modifies the rule to be an IRA requirement, rather than a prohibited transaction rule (i.e., in order to be an IRA, it must meet this requirement). This section generally takes effect for tax years beginning after December 31, 2021, but there is a 2-year transition period for IRAs already holding these investments.”
According to RITA, “These under-the-radar provisions have never been publicly vetted and will have unintended and adverse impacts on you and millions of other Americans who wish to save for a secure retirement through Main Street investments.”
“RITA supports a sensible and reasonable cap,” says Mary Mohr, Executive Director of RITA. “However, RITA has significant concerns with some of the IRA provisions proposed in connection with the Ways and Means markup of the Build Back Better Act; we are working diligently to push back against recent proposals by the U.S. House of Representatives Committee on Ways and Means.”
RITA is imploring their followers and associates to locate and contact their U.S. Congressional Representative at https://www.house.gov/representatives/find-your-representative and their U.S. Senators at https://www.senate.gov/senators/senators-contact.htm to oppose limitations on IRA investment choice.
RITA is a professional trade association dedicated to expanding opportunities for all Americans to save and invest for retirement. Founded in 1987, RITA is comprised of regulated banks, trust companies, and industry-related professionals. RITA exists to be the leading educator and advocate for the growth and best practices of the self-directed retirement plan industry by providing resources, information, communication, and support to both members and investors. To learn more, visit ritaus.org.