The Securing a Strong Retirement Act — the bill dubbed “Secure Act 2.0″ that resoundingly passed the House on March 29 — would push the required beginning date for retirement account distributions from age 72 to age 75.
Once taxpayers reach the required beginning date, they must begin taking annual withdrawals known as required minimum distributions from retirement savings accounts funded with pretax dollars (including IRAs and 401(k)s).
The original Secure Act raised the required beginning date from age 70½ to age 72 for tax years beginning in 2020 and thereafter. The legislation is not yet scheduled for a Senate vote, and many expect the Senate will introduce its own version of the “Secure Act 2.0” before any agreement is reached on a final law.
We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about raising the RMD age to 75.
Below is a summary of the debate that ensued between the two professors.
Byrnes: Taxpayers are living longer and should be able to reap the benefits of allowing their retirement funds to grow tax-deferred for a long period of time. This proposal will allow taxpayers to build larger IRA balances and is just good sense now that more older Americans continue to work past the current RMD age.
Bloink: All this proposal would do is provide yet another tax benefit to the wealthy. Let’s face it. Most ordinary Americans need to access their retirement savings as soon as they enter retirement — often even earlier than the required beginning date of age 72. The only Americans who would benefit from this pushback are those that simply don’t need the money — meaning the wealthiest Americans who don’t live off their retirement savings during retirement.