What You Need to Know
- Congress likely didn't intend for RMDs to be required in years 1-9 after an account holder's death, Slott says.
If Congress really wants to help retirees and those saving for retirement, it needs to fix the 10-year rule in the IRS’ proposed regulations on how to handle required minimum distributions under the Setting Every Community Up for Retirement Enhancement (Secure) Act of 2019, according to IRA specialist Ed Slott of Ed Slott & Co.
None of the bills that are to make up Congress’ Secure Act 2.0 package include such a fix, Slott told ThinkAdvisor Tuesday in an email.
The House passed the Securing a Strong Retirement Act of 2022, known as Secure Act 2.0, on March 29. The Senate Health, Education, Labor & Pensions Committee passed by voice vote on June 14 the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg, or Rise & Shine Act, which is expected to become part of the Senate’s Secure 2.0 legislation.
The Senate Finance Committee plans to consider Wednesday the Enhancing American Retirement Now (EARN) Act, which is also intended to be included in the Senate’s version of Secure Act 2.0.
The bills from the HELP Committee and Finance Committee will be combined to make up the Senate’s Secure Act 2.0 package. The House and Senate bills must then be reconciled.
“If Congress really wanted to make a difference, they could have included a provision to clear up the SECURE Act confusion over the 10-year rule where [the] IRS now says (in the proposed regulations issued earlier this year) that RMDs would be required for years 1-9 of the 10-year term if RMDs had already begun,” Slott told ThinkAdvisor on Tuesday.
“No one, probably including Congress, thought that the 10-year rule would work like that,” Slott said.
Congress, he continued, “should insert a fix for this to clarify that the 10-year rule has no RMDs. That would be something that would affect and help more people than everything else combined in these new packages of proposals that still have a long way to go before enactment.”