A New Senate Bill Could Make These Key Changes To Your IRA

Millions of American households use individual retirement accounts to save for the future, but Sen. John Barrasso argues some of the federal rules governing those accounts are stuck in the past.

The Wyoming Republican introduced the SMART Savings Act on July 30, 2026, a proposal that would change how IRAs are regulated and potentially give account holders access to lower-cost or enhanced financial services, which could matter for anyone trying to retire comfortably.

What the SMART Savings Act would change

The Simplifying Modern Access to Retirement Tools for Savings Act, or SMART Savings Act, would amend the Internal Revenue Code so IRAs are no longer included in certain federal prohibited-transaction rules.

Those rules currently restrict certain transactions involving retirement accounts and disqualified persons, including transactions that could benefit the account owner or another party improperly. The IRS defines a prohibited transaction as an improper use of an IRA by its owner, beneficiary, or another disqualified person. Examples can include borrowing money from an IRA, selling property to it, or using account assets for personal benefit.

Barrasso argues those rules have created overlapping oversight between the tax code and the Department of Labor.

"Washington red tape shouldn't prevent Americans from saving for their retirement," Barrasso said. "Outdated and unnecessary federal rules create uncertainty and make it harder for financial advisors to serve retirement savers."

IRA owners could get access to more financial perks

One of the most consumer-facing provisions deals with what the legislation calls "relationship benefits."

Under the bill, an IRA balance or the fees paid for IRA services could be considered when determining whether a customer qualifies for reduced-cost, no-cost, or enhanced financial products and services. That could matter for customers whose financial institutions offer better rates, lower fees, or additional services once they reach certain asset thresholds.

Supporters argue IRA assets have sometimes been excluded from those arrangements because firms worry that providing a benefit connected to an IRA could violate prohibited-transaction rules. The SMART Savings Act would explicitly allow these relationship benefits without requiring an individual Department of Labor exemption.

Exactly what benefits consumers might receive would still depend on their bank, brokerage, or financial adviser.

The bill would reduce the Labor Department's role

The legislation would also remove IRAs from the prohibited-transaction framework that gives the Department of Labor authority over certain IRA-related arrangements. Supporters argue that would reduce the Labor Department's role in regulating certain IRA-related advice and financial arrangements.

Barrasso's office says that would prevent future Labor Department regulations from using those provisions to restrict how IRA holders receive financial advice. Barrasso specifically points to the Obama administration's 2016 fiduciary rule and the Biden administration's 2024 Retirement Security Rule as examples of what he considers regulatory overreach.

The ban on using IRA assets for personal benefit stays

Removing prohibited transaction rules might sound like IRA owners would suddenly have much more freedom to use their retirement assets. The legislation includes an important safeguard: It would preserve the prohibition on self-dealing, while carving out certain "relationship benefits."

Under the bill, an IRA owner who improperly deals with the account's income or assets for their own personal benefit could cause the account to lose its status as an IRA from the first day of that tax year.

The SMART Savings Act doesn't rewrite rollover rules

Workers with several retirement accounts may also wonder whether the SMART Savings Act would make it easier to move money between old 401(k)s and IRAs.

Despite the broader goal of simplifying retirement regulation, The current bill text does not address familiar rollover rules, such as the 60-day rollover deadline, the one-rollover-per-year rule for certain IRA-to-IRA transactions, or the tax treatment of direct trustee-to-trustee transfers.

That means someone moving an old workplace retirement balance into an IRA would still need to pay close attention to existing rollover requirements if the legislation became law.

Who could notice the biggest difference?

The changes may matter most to people who maintain substantial IRA balances with financial institutions that provide relationship pricing or additional services based on total household assets.

Someone managing several retirement and taxable accounts at one brokerage, for example, could potentially have an IRA balance considered when determining eligibility for lower fees or enhanced services.

Financial advisers could also gain more flexibility in how they serve IRA clients without seeking specific Labor Department exemptions.

Nothing about your IRA changes yet

The SMART Savings Act has only been introduced, meaning none of these rules have changed yet. Barrasso is joined by Sens. Marsha Blackburn and Steve Daines as co-sponsors, while Rep. Claudia Tenney introduced companion legislation in the House. The proposal also has support from financial-services groups including SIFMA, the Investment Company Institute, NAIFA, and the Financial Services Institute.

The bill would apply its changes to transactions occurring after enactment, meaning existing rules remain in place unless Congress passes the legislation and it is signed into law.

Until then, IRA owners must continue following existing prohibited-transaction rules and should not assume that financial arrangements covered by the proposal are already permitted.

Bottom line

Barrasso's SMART Savings Act could make meaningful changes to how IRAs held by millions of American households are regulated, but it wouldn't overhaul the basic rules governing how much you can contribute or when you can withdraw your money.

Instead, the proposal would remove IRAs from certain federal prohibited transaction rules, limit Department of Labor oversight, and make it easier for account balances to qualify savers for reduced-cost or enhanced financial services. For now, IRA holders should still focus on whether they are on track for retirement under the rules already in place.

This article is for informational purposes only and should not be considered investment advice.

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