It could be argued the required minimum distributions are the bane of retirees’ existence.
Under current law, participants are generally required to begin taking distributions from their retirement plans at age 72, an increase ushered in by the Setting Every Community Up for Retirement Act, or Secure, Act of 2020.
Secure 2.0 — which passed the House Ways and Means Committee on May 5 — increases the RMD age to 73 starting on Jan. 1, 2022; to 74 starting on Jan. 1, 2029; and 75 starting on Jan. 1, 2032.
Secure Act 2.0, known officially as the Securing a Strong Retirement Act of 2021, has not been taken up by the full House.
IRA and tax expert Ed Slott of Ed Slott & Co., reiterated his view to ThinkAdvisor in a recent interview that Congress should do away with RMDs. “My feeling is they should just kill lifetime RMDs all together; there’s no need for any age, for anybody to take lifetime RMDs anymore; [Congress] took care of that in the Secure Act when they put it [at a] 10-year end date for most non-spouse beneficiaries.”
According to the IRS, 80% of people “take the RMD amount or more because they need the money,” Slott said. “So telling them they don’t have to take money they need doesn’t do anybody any favors. It only helps the people who don’t need the money, which means they probably have larger IRAs and they’ll be facing bigger tax bills later.”
See the gallery above for five RMD-related bills introduced this year.