Skip to content

How Will New Legislation on Retirement Change RMD Age?

MP900398819The bill will change the age when account owners must start taking their Required Minimum Distributions, and it would make it easier for workers to save for retirement while repaying student loans.

Legislation was reintroduced by Senators Ben Cardin and Rob Portman that will raise the RMD age to 75. There’s some overlap from their Retirement Security and Savings Act of 2019 with provisions in the Retirement Enhancement and Savings Act (RESA) of 2019, but overall, the bills are focused on improving the chances for Americans to successfully prepare for retirement.

Think Advisor reports in the article “New Retirement Bill Would Boost RMD Age to 75” that the RESA bill, which was introduced by Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and ranking member Ron Wyden, D-Ore., is similar to H.R. 1994, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The latter bill is expected to get a vote on the House floor very soon.

The Portman-Cardin bill phases in the RMD age increase over several years. The bill would also update mortality tables to reflect longer life expectancies.

The bill would also broaden the ability of employer-sponsored 403(b) plans to offer collective investment trusts (CITs). A CIT is a mutual fund-like vehicle used in some 401(k)s and pension plans that can help plan sponsors save on expenses.

The Insured Retirement Institute, a lobbying group for the annuity industry, added its support for the bill.

“Section 117 [of the bill] would level the playing field, by providing insurance products with the same exemptions as CITs,” the group said in a letter to senators, sparking “a robust and competitive marketplace which is vital to ensure Americans have access to the appropriate savings option for their financial situation.”

The bill would also let those with Roth accounts in 457(b), 401(k), 401(a), and 403(b) plans roll Roth IRA assets into these plans. It would also allow 457(b), 401(a), 401(k) and 403(b) plan participants to make qualifying charitable distributions. Right now they are only allowed from IRAs.

The student loan portion of the bill is addressed in the Retirement Parity for Student Loans Act, reintroduced by Senate Finance Committee ranking member Wyden and four colleagues. This would allow employers to make matching contributions to a retirement plan, while employees make student loan payments.

If an employee’s student loan payment is $500 and their employer matches 50% of retirement plan contributions, the employer would contribute $250 to the employee’s retirement account.

Reference: Think Advisor (May 14, 2019) “New Retirement Bill Would Boost RMD Age to 75”