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Regulation and Compliance > Legislation

New Senate Retirement Bills Aim to Raise RMD Age, IRA Contribution Limits

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What You Need to Know

  • The Keeping Your Retirement Act aims to increase the RMD age to 75.
  • Separately, the Increasing Retirement Amount Act would boost IRA contribution limits.
  • Close to 30% of American workers did not have access to a retirement plan at work, as of 2020.

Sen. John Kennedy, R-Louisiana, introduced legislation Monday to raise the required minimum distribution age from 72 to 75 for certain retirement accounts and also allow workers who don’t have access to a workplace retirement plan to increase their IRA contribution limit.

The Keeping Your Retirement Act and the Increasing Retirement Amount Act give workers “more control over their own retirement savings,” Kennedy said.

As it stands now, individuals who are at least 72 years old must make RMD withdrawals from their retirement accounts. “These premature withdrawals can unnecessarily shrink people’s hard-earned savings,” Kennedy said.

RMDs “also increase the taxable income of seniors who are still working, which may push some seniors into higher income brackets and potentially increase their tax liability,” Kennedy said.

The Increasing Retirement Amount Act would increase the IRA contribution limit to $12,000 per year for individuals without a retirement plan at work and boost the IRA contribution limit to $15,000 per year for individuals who are at least 50 years old and who don’t have a workplace retirement plan.

“Americans cannot contribute more than $6,000 per year to their IRAs, whether or not their employers offer a retirement plan,” Kennedy said.

“Contributions to traditional IRAs are tax-deductible,” he added. “In 2017, 50% of IRA owners who contributed to their traditional IRAs made the maximum contribution. As of March 2020, 29% of American workers did not have access to a retirement plan through their employers.”

Other Legislative Moves

Kennedy joins other lawmakers who’ve recently floated similar retirement savings bills.

Sens. Ben Cardin, D-Md., and Rob Portman, R-Ohio, recently reintroduced S. 1770, the Retirement Security & Savings Act, which includes a few new provisions.

The Portman-Cardin legislation, like Kennedy’s bills, could get rolled into the Secure Act 2.0 — which passed the House Ways and Means Committee on May 5.

Brad Campbell, partner at Faegre Drinker in Washington, told ThinkAdvisor recently that while Secure 2.0 will likely get a House vote this summer, it’s unclear when the huge retirement bill will come up for a Senate vote as retirement-related bills continue to be floated.

“It is not clear whether they [lawmakers] intend to develop and move a bill independently, or to react to the Secure Act [2.0] when it comes over from the House,” Campbell told ThinkAdvisor.

There is “wide, bipartisan support for these [retirement-related] bills, and a variety of possible paths, but the mechanics of passing them are still somewhat murky,” Campbell added. “I remain fairly confident, however, that some version of the [Secure Act 2.0] legislation has a good chance of passing this year.”


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