Simple and sep roth iras

(a) In general Section 408A of the Internal Revenue Code of 1986 is amended by striking subsection (f). (b) Rules relating to simplified employee pensions (1) Contributions Section 402(h)(1) of such Code is amended by striking and at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting, and, and by adding at the end the following new subparagraph: (C) in the case of any contributions pursuant to a simplified employer pension which are made to an individual retirement plan designated as a Roth IRA, such contribution shall not be excludable from gross income.. (2) Distributions Section 402(h)(3) of such Code is amended by inserting, or section 408A(d) in the case of an individual retirement plan designated as a Roth IRA before the period at the end. (3) Election required Section 408(k) of such Code is amended by redesignating paragraphs (7), (8), and (9) as paragraphs (8), (9), and (10), respectively, and by inserting the after paragraph (6) the following new paragraph: (7) Roth contribution election An individual retirement plan which is designated as a Roth IRA shall not be treated as a simplified employee pension under this subsection unless the employee elects for such plan to be so treated (at such time and in such manner as the Secretary may provide).. (c) Rules relating to simple retirement accounts (1) Election required Section 408(p) of such Code is amended by adding at the end the following new paragraph: (11) Roth contribution election An individual retirement plan which is designated as a Roth IRA shall not be treated as a simple retirement account under this subsection unless the employee elects for such plan to be so treated (at such time and in such manner as the Secretary may provide).. (2) Rollovers Section 408A(e) of such Code is amended by adding at the end the following new paragraph: (3) Simple retirement accounts In the case of any payment or distribution out of a simple retirement account (as defined in section 408(p)) with respect to which an election has been made under section 408(p)(11) and to which 72(t)(6) applies, the term qualified rollover contribution shall not include any payment or distribution paid into an account other than another simple retirement account (as so defined).. (d) Coordination with roth contribution limitation Section 408A(c) of such Code is amended by adding at the end the following new paragraph: (7) Coordination with limitation for simple retirement plans and seps In the case of an individual on whose behalf contributions are made to a simple retirement account or a simplified employee pension, the amount described in paragraph (2)(A) shall be increased by an amount equal to the contributions made on the individual’s behalf to such account or pension for the taxable year, but only to the extent such contributions— (A) in the case of a simplified retirement account— (i) do not exceed the sum of the dollar amount in effect for the taxable year under section 408(p)(2)(A)(ii) and the employer contribution required under subparagraph (A)(iii) or (B)(i), as the case may be, of section 408(p)(2), and (ii) do not cause the elective deferrals (as defined in section 402(g)(3)) on behalf of such individual to exceed the limitation under section 402(g)(1) (taking into account any additional elective deferrals permitted under section 414(v)), or (B) in the case of a simplified employee pension, do not exceed the limitation in effect under section 408(j).. (e) Conforming amendment Section 408A(d)(2)(B) of such Code is amended by inserting, or employer in the case of a simple retirement account (as defined in section 408(p)) or simplified employee pension (as defined in section 408(k)), after individual’s spouse. (f) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2024.