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April 23, 2020 at 04:35 PM
Sen. Ben Cardin, D-Md., signaled Thursday that the next round of coronavirus stimulus could likely include required minimum distribution relief.
During an early Thursday afternoon webcast held by the American Council for Capital Formation, Cardin was questioned on measures lawmakers could take to deal with the massive withdrawals from retirement accounts taking place now.
“In response to the coronavirus, there were provisions put into the CARES Act that deals with pension issues,” Cardin responded. “We are suggesting that perhaps we should be doing more, and that is, ease up on the required minimum distributions … people can keep more money in their retirement,” Cardin said. “That should be something we may be able to get done in a stimulus bill in the next couple weeks; it’s something we should take a look at.”
While Cardin did not elaborate on the types of RMD relief that could be considered, IRA expert Ed Slott told ThinkAdvisor on Thursday that he hoped Cardin means eliminating RMDs altogether, which Slott has been urging for years.
“There is no reason for them anymore, other than to annoy seniors,” Slott said.
According to the Treasury Department’s own numbers, “80% of people subject to RMDs take that amount or more because they need the money,” Slott said. “Only 20% take the minimum. Eliminating lifetime RMDs also makes sense since the Secure Act did away with the stretch IRA (beginning in 2020) for most non-spouse beneficiaries anyway, forcing the funds out in 10 years after death. This provides an end date to most IRAs so there is no need to force money out before then. Now that we have this deadline on when the taxes will be eventually be paid, the RMD burden should be removed.”
