Ed Slott: Bill Waiving RMDs for 2022 Is Doomed

Ed Slott: Secure Act 2.0 Reduces

A bill introduced this summer that would waive for 2022 the required minimum distribution rules for defined contribution or individual retirement plans has little chance of making it into the final Secure Act 2.0 package, according to Ed Slott of Ed Slott & Co.

Rep. Warren Davidson, R-Ohio, introduced the bill in July, and it has been referred to the House Ways and Means Committee.

Under current law, participants in tax-exempt retirement plans must begin taking distributions at the required beginning date (i.e., April 1 or the calendar year following the later of the calendar year in which the employee turns 72, or the calendar year in which the employee retires).

Ed Slott of Ed Slott & Co. told ThinkAdvisor on Thursday that Davidson’s bill is unlikely to gain traction this year. “Plus, it’s way too late in the year to waive RMDs because it would create more problems than solutions. Advisors would be spending more time on the phone with clients who already took their RMDs — asking, ‘What do I do now?”

While Davidson’s bill, H.R. 8331, provides for a temporary waiver for RMDs, the bills that are expected to make up the Secure 2.0 package raise the RMD age from 72 to 75. Slott doesn’t see an RMD waiver making it into the final Secure Act 2.0 package.

Under the House-passed Securing a Strong Retirement Act of 2022, as well as the Senate’s Enhancing American Retirement Now (EARN) Act and the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg, or Rise & Shine, Act, the age for taking RMDs from IRAs would increase.

The House bill would delay the first RMD year to age 73 from 72 beginning in 2023, 74 in 2030 and 75 in 2033. The Senate EARN bill would change the first RMD year to age 75, effective in 2032.