A controversial proposal that sought to prohibit holding alternative investments in an individual retirement account has been removed from the framework of the Build Back Better Act, President Biden’s climate and social spending bill that is now being considered in the House of Representatives.
Section 138312 would have prohibited IRA investments from including publicly issued securities such as non-traded real estate investment trusts, business development companies, and other private offerings. The proposal was originally included in the draft legislation that passed out of the House Ways and Means Committee, but was removed in the latest version, as reported out of the House Committee on Rules.
The Alternative & Direct Investment Securities Association, the Institute for Portfolio Alternatives, and other industry trade groups and their members submitted thousands of comment letters to various House members in opposition to a proposal.
ADISA has cautioned, however, that while unlikely, the proposal could reemerge in a future version of the bill. “This is welcome news, but the final curtain has not yet come down on the ongoing negotiations on the proposed reconciliation bill. Neither the House nor Senate have agreed to nor voted on the president’s proposal,” ADISA said in an advocacy update.
In a letter to IPA members, Anya Coverman, senior vice president of government affairs and general counsel, said “[The] announcement is a significant victory for retirement savers and their access to portfolio diversifying investments within tax-advantaged retirement accounts. While neither the House or Senate have voted on this new plan, and it’s not yet law, we’ve very pleased with the outcome.”
The $1.75 trillion spending bill was scaled down from the original $3.5 trillion and focuses on childcare and caregiving, climate investments, expanding access to healthcare, and strengthening the public safety net.
Democrats need nearly full party support for the legislation to pass, and centrists Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have not publicly committed to voting for the current framework at press time.