On Wednesday, the Internal Revenue Service (IRS) released proposed regulations to implement the SECURE Act’s age increase to required minimum distributions (RMD) from qualified retirement accounts.
The proposed rule (RIN: 1545-BP82) would allow retirees to leave tax-deferred retirement savings in qualified accounts until age 72, up from 70 ½.
The lengthy proposal, signed by Douglas W. O’Donnell, Deputy Commissioner for Services and Enforcement, addresses such questions as a required timeline for distributions after the employee’s death, spouse and beneficiary treatment, rollovers, and annuity distributions.
“This document contains proposed regulations relating to required minimum distributions from qualified plans,” according to the summary. “These regulations will affect administrators of, and participants in, those plans; owners of individual retirement accounts and annuities; employees for whom amounts are contributed to section 403(b) annuity contracts, custodial accounts, or retirement income accounts; and beneficiaries of those plans, contracts, accounts, and annuities.”
The agency said commenters are “strongly encouraged” to submit public comments electronically. Submit electronic submissions via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and REG–105954–20) by following the online instructions for submitting comments.
Required Minimum Distributions from DC Plans
The proposal reinforced RMDs from defined contribution (DC) plans by noting that, in general, it retains the existing method that determines the calculation for any given year by dividing the employee’s account balance as of the end of the prior year by an applicable divisor.
“The existing regulations refer to the divisor as the applicable distribution period,” it reads. “However, in light of the amendments made by section 401 of the SECURE Act that may result in different distribution periods, these proposed regulations refer to the divisor as the applicable denominator.”
In addition to the requirement to take annual required minimum distributions, it adds that the proposed regulations implement those amendments by requiring that a full distribution of the remaining interest be taken in certain circumstances.
“These proposed regulations also update the list of amounts of distributions and deemed distributions that are not taken into account in determining whether the required minimum distribution has been made for a calendar year,” It concludes.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
