Details of Public Law 117-328, section 601 , Consolidated Appropriations Act, 2023, Simple and SEP Roth IRAs

This provision eliminates the prohibition against a simplified employee pension or a simple retirement account being designated as a Roth IRA.

Rules Relating to Simplified Employee Pensions

The provision specifies that, contributions made pursuant to a simplified employer pension to an individual retirement plan designated as a Roth IRA are included in gross income and distributions are excluded from gross income. This provision provides that an individual retirement plan designated as a Roth IRA will not be treated as a simplified employee pension unless the employee elects to do so.

Rules Relating to Simple Retirement Accounts

This provision provides that an individual retirement plan designated as a Roth IRA will not be treated as a simple retirement account unless the employee elects to do so. Current federal law prohibits a rollover contribution to a Roth IRA unless it is a qualified rollover contribution. In the case of any payment or distribution out of a simple retirement account with respect to the election described above and to which the 25 percent increased early distribution penalty applies, “qualified rollover contribution” only includes a payment or distribution paid into an account from another simple retirement account.