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<< Older News  |  March 7, 2021

News

All News > Required Minimum Distributions (RMDs)

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Do Required Minimum Distribution 401(k) Rules Matter, and for Whom?
Pension Research Council, The Wharton School of The University of Pennsylvania Link to more items from this source
Feb. 22, 2021

"[The authors'] calibrated lifecycle model measures the impact of RMD rules on financial behavior of heterogeneous households during their worklives and retirement.... [P]roposed reforms to delay or eliminate the RMD rules should have little effect on consumption profiles but more impact on withdrawals and tax payments for households with bequest motives."

Tags: Required Minimum Distributions (RMDs)  •  Retirement Plan Design  •  Retirement Plan Policy

RMDs Required Again in 2021
TheStreet Link to more items from this source
Feb. 11, 2021

"If you didn't take distributions from your retirement plan and IRA accounts in 2020, you may be surprised by your 2021 RMD."

Tags: Required Minimum Distributions (RMDs)  •  Retirement Plan Information for Employees

Would Raising the Required Minimum Distribution Age for Retirement Accounts Enhance Old-Age Security?
TIAA Institute Link to more items from this source
Jan. 26, 2021

"Changing RMD rules would likely have a negligible impact on tax revenue, while increasing flexibility for retirement savers. Raising (or eliminating) the RMD age has little effect on individuals' financial behaviors while they are still working. At retirement, the impact of raising the RMD age depends on whether the retiree wishes to bequeath wealth to someone else. For households without a bequest motive, the chance that a retiree would elect to withdraw less than the RMD is relatively low (between 2% and 4% depending on educational level). For households with a bequest motive, the probabilities are higher and vary between 6% and 12%."

Tags: Required Minimum Distributions (RMDs)  •  Retirement Plan Policy

New COVID-19 Stimulus Law Does Not Extend CARES Act CRD Relief
Slott Report Link to more items from this source
[Guidance Overview]
Jan. 11, 2021

"The new law does include retirement plan tax breaks for non-COVID-19 disaster declarations, like fires or hurricanes. Those breaks are the same breaks Congress provided in prior disaster relief legislation and in the CARES Act for CRDs.... The legislation also includes the same relief for plan loans made on account of a covered disaster that we saw in prior legislation.... [N]one of this relief applies to COVID-related distributions or loans taken in 2021. The new law also does not extend the waiver of required minimum distributions (RMDs) into 2021."

Tags: CARES Act  •  Consolidated Appropriations Act, 2021   •  Coronavirus (COVID-19)  •  Misc. Distribution Issues  •  Required Minimum Distributions (RMDs)

IRS Reduces Minimum Withdrawal Amounts for IRAs and 401(k) Plans
Forbes Link to more items from this source
Dec. 28, 2020

"The age at which the required minimum distribution (RMD) rules first apply depend on your date of birth. [1] If you were born on or after July 1, 1949, then the rules first apply for the calendar year during which you reach age 72. [2] If you were born on or before June 30, 1949, then the rules first apply for the calendar year during which you attain age 70-1/2.... Under the new RMD rules, the minimum amounts that will be required to be withdrawn will reduce by about 6.5% to 7.5% each year compared to the current rules."

Tags: Required Minimum Distributions (RMDs)

This Retirement Rule Will Be Back in 2021
Fox Business Link to more items from this source
Dec. 28, 2020

"Thanks to the CARES Act ... RMDs were waived for 2020. That allowed many seniors to reap tax savings at a difficult time. But RMDs will be back on the table in 2021. Now's the time to prepare for them to avoid getting caught off-guard."

Tags: CARES Act  •  Required Minimum Distributions (RMDs)

How Much Will Your Retirement Taxes Be?
Squared Away Blog, by the Center for Retirement Research at Boston College Link to more items from this source
Dec. 17, 2020

"Households with income in the top 20 percent have nearly $770,000, on average, in retirement savings and other financial assets -- their taxes equal 11 percent of their total retirement income. However, limiting the households to the top 5 percent of the income distribution, the tax rate increases to 16 percent -- and the top 1 percent pays 23 percent. These estimates assume retirees start pulling money out of their taxable 401(k) and IRA accounts when the IRS' required minimum distributions (RMDs) kick in at age 70-1/2 -- this age will increase to 72 next year. The tax rates were very similar under alternate scenarios that assume retirees either start withdrawing savings prior to the RMD or buy an immediate annuity with a survivor's benefit."

Tags: Misc. Distribution Issues  •  Required Minimum Distributions (RMDs)

Text of FRTIB Final Rule: Methods of Withdrawing Funds from the Thrift Savings Plan
Federal Retirement Thrift Investment Board [FRTIB)] Link to more items from this source
[Official Guidance]
Nov. 25, 2020

10 pages. "Many separated TSP participants who are required to receive RMDs elect to receive life-expectancy-based installment payments as a way to ensure they satisfy this requirement. The existing restrictions on life-expectancy-based installment payments put these participants in an untenable situation -- they must either continue to receive payments and forego the chance to let their account balances recover, or stop their payments and forego the ability to restart life-expectancy-based payments in the future.... [E]ffective January 1, 2021 ... the FRTIB is removing the restrictions on life-expectancy-based installment payments ... [which will allow] TSP participants who are eligible for installment payments to elect to receive payments based on life expectancy whether or not they previously started and then stopped installment payments.... This new withdrawal election is subject to the spousal consent rules set forth [by statute]."

Tags: Federal Government Plans  •  Required Minimum Distributions (RMDs)

IRS Updates Mortality Tables for Required Minimum Distributions
Mercer Link to more items from this source
[Guidance Overview]
Nov. 16, 2020

"The new tables reflect the same individual-annuity mortality basis as the 2019 proposal ... and produce life expectancies a year or two longer on average than the current tables.... IRS decided not to include automatic update provisions in the final rule. IRS anticipates — but didn't commit to — reviewing the tables after 10 years or when a new study of individual-annuity mortality experience is published."

Tags: Required Minimum Distributions (RMDs)

IRS Issues Final Regs Updating RMD Life Expectancy Tables
Ice Miller LLP Link to more items from this source
[Guidance Overview]
Nov. 11, 2020

"The IRS had previously issued proposed regulations in November of 2019, pursuant to which the updated life expectancy tables and uniform lifetime table would have been applicable to distribution calendar years beginning on or after January 1, 2021. However, under the final regulations, the updated life expectancy tables and uniform lifetime table will apply for distribution calendar years beginning on or after January 1, 2022."

Tags: Required Minimum Distributions (RMDs)

Required Minimum Distributions Under the SECURE Act
Belfint Lyons Shuman Link to more items from this source
Nov. 11, 2020

"The shift in the RMD age from 70½ to 72 will not change the audit procedures performed, but the RMD holiday gives us an opportunity to revisit a plan sponsor's administrative responsibilities and see whether the processes in place for 2021 RMDs are designed to prevent operational failures. In many cases, changes in the law lead to mistakes when systems and processes are not updated timely. In those cases, correction programs are available to make things right."

Tags: Required Minimum Distributions (RMDs)  •  SECURE Act

IRS Issues New RMD Tables for 2022
Slott Report Link to more items from this source
Nov. 9, 2020

"RMDs are waived for 2020, and RMDs for 2021 will be calculated under the current tables. The IRS revised the current tables, which have been in effect since 2002, to reflect the fact that Americans are now living longer. Last November, the IRS issued proposed regulations that were supposed to go into effect for 2021. However, because the final regulations were issued so late in 2020, the IRS delayed the new tables another year to give custodians and record keepers enough time to implement them."

Tags: Required Minimum Distributions (RMDs)

Text of IRS Final Regs: Updated Life Expectancy and Distribution Period Tables Used for Purposes of Determining Minimum Required Distributions
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Nov. 6, 2020

99 pages."This document sets forth final regulations providing guidance relating to the life expectancy and distribution period tables that are used to calculate required minimum distributions from qualified retirement plans, individual retirement accounts and annuities, and certain other tax-favored employer-provided retirement arrangements.... The life expectancy tables and Uniform Lifetime Table under these regulations apply for distribution calendar years beginning on or after January 1, 2022."

Tags: Required Minimum Distributions (RMDs)

Bipartisan Bill Introduced: 'Securing a Strong Retirement Act of 2020'
Committee on Ways and Means, U.S. House of Representatives Link to more items from this source
Oct. 27, 2020

"Today, Ways and Means Committee Chairman Richard E. Neal (D-MA) and Ranking Member Kevin Brady (R-TX) introduced the Securing a Strong Retirement Act of 2020 ... [which] will: [1] Promote savings earlier for retirement by enrolling employees automatically in their company's 401(k) plan, when a new plan is created; [2] Create a new financial incentive for small businesses to offer retirement plans; ... [3] Expand retirement savings options for non-profit employees by allowing groups of non-profits to join together to offer retirement plans to their employees; [4] Offer individuals 60 and older more flexibility to set aside savings as they approach retirement; [5] Allow individuals to save for retirement longer by increasing the required minimum distribution age to 75; ... [6] Protect retirees who unknowingly receive retirement plan overpayments; and [7] Make it easier for employees to find lost retirement accounts by creating a national, online, database of lost accounts." [Also available: section-by-section summary of the bill and  its full text].

Tags: Required Minimum Distributions (RMDs)  •  Retirement Plan Design  •  Retirement Plan Policy

The SECURE Act's Effect on Retirement Plans: A Refresher
Cammack Retirement Group Link to more items from this source
[Guidance Overview]
Oct. 22, 2020

"[O]f all the SECURE Act provisions, only one, relating to Required Minimum Distributions (RMDs), was delayed by the COVID-19 pandemic. While there were not too many provisions in the SECURE Act that were hugely disruptive to plan sponsors, there are a few about which retirement plan sponsors should be cognizant."

Tags: Required Minimum Distributions (RMDs)  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE Act

Text of 2020 Instructions for IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Oct. 20, 2020

Oct. 13, 2020. "[1] Qualified disaster or coronavirus-related distributions.... [2] Maximum age for traditional IRA contributions.... [3] Withdrawals in the case of a birth or adoption of a child.... [4] Increase in age for mandatory distributions.... [5] Temporary waiver of minimum required distributions." [Also available: 2020 IRS Form 5329]

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Misc. Distribution Issues  •  Required Minimum Distributions (RMDs)

Relief Beyond August 31 for RMD Repayments
Slott Report Link to more items from this source
Aug. 26, 2020

"If you received your RMD in July or August, the normal 60-day deadline will give you additional time beyond August 31 to repay the RMD. And, if you are a 'qualified individual,' you don't have to sweat the August 31 or 60-day deadlines at all because you have plenty of time to repay your RMD.... Since your RMD is a CRD, you have three years to return it to an IRA or workplace plan."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Required Minimum Distributions (RMDs)

Deadline for Returning RMDs to Retirement Accounts is Approaching Fast
Kiplinger Link to more items from this source
Aug. 25, 2020

"If you miss the August 31 deadline, the money you took out of a traditional IRA, 401(k) plan, or other retirement account will be taxable income for 2020."

Tags: Required Minimum Distributions (RMDs)

August 31 IRS Deadlines Fast Approaching
The Wagner Law Group Link to more items from this source
[Guidance Overview]
Aug. 21, 2020

"Individuals who received required minimum distributions during 2020 have until August 31, 2020, to roll over their payments if they wish to defer paying income taxes on those amounts. Employers have until August 31, 2020, to adopt amendments to suspend safe harbor employer contributions to their defined contribution 401(k) plans even if their annual notices did not reserve the right to reduce or suspend such contributions or they are not operating at an economic loss."

Tags: 401(k) Plans  •  Coronavirus (COVID-19)  •  Required Minimum Distributions (RMDs)  •  Rollovers

Complications When Undoing Unwanted 2020 RMDs Before August 31
Nerd's Eye View Link to more items from this source
[Guidance Overview]
Aug. 20, 2020

"[W]hat happens when a client took an in-kind distribution earlier this year to satisfy their required minimum distribution[?] In many instances, the value of the distributed asset may have appreciated substantially since they were distributed. If the distribution was made from an IRA, retirees must return the same property that was taken out (as if the distribution was never made in the first place), regardless of how much the value of the property increased (or decreased) in the past few months. For those who may have already (incorrectly) returned cash to try and complete a rollover of the in-kind distribution, two steps are required to 'fix' the 'problem' without any penalties."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Required Minimum Distributions (RMDs)  •  Rollovers

IRS Provides Guidance on 2020 Waiver of Retirement Plan Required Minimum Distributions
Frost Brown Todd LLC Link to more items from this source
[Guidance Overview]
Aug. 14, 2020

"Individuals who receive an RMD in 2020 or one or more payments that include a 2020 RMD that would be treated as part of a series of substantially equal periodic payments may rollover such distribution to an employer's retirement plan ... or to an IRA. The deadline to roll over any such distribution ... will not be before August 31, 2020 even if the distribution was made as early as January 2020.... The deadline for a beneficiary making an election for the use of either the five-year rule or the life expectancy rule in determining an RMD ... is extended one year to December 31, 2021 if the deadline is otherwise December 31, 2020. There is no similar extension if death occurs in 2020."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Required Minimum Distributions (RMDs)  •  Rollovers  •  SECURE Act

IRS Expands Participants' Ability to Reverse 2020 Required Minimum Distributions (PDF)
Roberts & Holland LLP Link to more items from this source
[Guidance Overview]
Aug. 11, 2020

"The IRS has now announced that any defined contribution plan participants who received RMDs in 2020 -- including RMDs paid in January 2020 or later -- may recontribute these RMDs to a tax-qualified plan or IRA by an extended deadline of August 31, 2020.... These recontributions are permitted only if the qualified plan accepts incoming rollover contributions by participants."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Required Minimum Distributions (RMDs)

Shrink Your RMDs in 2021 and Beyond by Using a QLAC
Kiplinger Link to more items from this source
Aug. 6, 2020

"[Qualified longevity annuity contracts] are a special type of annuity that lets you cut RMDs from your IRAs next year and beyond, reduce the taxes you pay and guarantee more lifetime income in old age."

Tags: Required Minimum Distributions (RMDs)  •  Retirement Plan Information for Employees  •  Retirement Plan Investments

Successor Beneficiary RMDs After Death of an Inherited IRA's Owner
Nerd's Eye View Link to more items from this source
[Guidance Overview]
July 29, 2020

"While Successor Beneficiaries who inherit accounts from beneficiaries taking RMDs using the 'stretch' provision will get the 10-Year Rule (from scratch), some Successor Beneficiaries (i.e., post-SECURE Act beneficiaries of Non-Eligible Designated Beneficiaries) will 'only' be able to step into the initial beneficiary's shoes, and will have to empty the balance of the IRA by the end 10-year period established by the original 10-year rule (i.e., the Non-Eligible Designated Beneficiary's 10-year window)."

Tags: IRAs  •  Required Minimum Distributions (RMDs)  •  SECURE Act

COVID-19: IRS Details CARES Act Relief for IRA Owners and Providers
Morgan Lewis Link to more items from this source
[Guidance Overview]
July 24, 2020

"The [IRS] recently released new guidance in IRS Notice 2020-50 and Notice 2020-51 ... 60-day rollover deadline extended until August 31, 2020 to roll over 2020 'would-be' RMDs.... Restriction on number of IRA rollovers in 12-month period lifted until August 31, 2020 for 2020 'would-be' RMDs.... 2020 inherited IRA 'would-be' RMDs may be rolled over by August 31, 2020... IRA providers required to notify IRA owners.... Expanded eligibility for Coronavirus-Related Distributions.... Form 1099-R required even if repayment in same year."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  IRAs  •  Misc. Distribution Issues  •  Required Minimum Distributions (RMDs)


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