Ways and Means Leaders Introduce Bipartisan Legislation to Increase Required Minimum Distribution Age
A bipartisan bill to increase RMD age to 75 introduced by leaders of the House Ways & Means Committee.
House Ways and Means Committee Chairman Richard Neal, (D-MA), joined by ranking member Kevin Brady, (R-TX), yesterday introduced bipartisan legislation dubbed the Securing a Strong Retirement Act of 2020, which is intended to boost the required minimum distribution age from 72 to 75. The bill builds on the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, “to further improve workers’ long-term financial wellbeing.”
Under current law, generally, those aged 72 and older must take required minimum distributions from employer-sponsored defined contribution plans and traditional IRAs. Neal and Brady’s bill would increase the age to 75 and would be effective for distributions required to be made after Dec. 31, 2020, with respect to individuals who turn 72 after that date.
“COVID-19 has only exacerbated our nation’s existing retirement crisis, further compromising Americans’ long-term financial security,” said Rep. Neal. “In addition to meeting workers’ and families’ most pressing, immediate needs, we must also take steps to ensure their wellbeing further down the road. With the Securing a Strong Retirement Act, Ranking Member Brady and I build on the landmark provisions in the SECURE Act and enable more workers to begin saving earlier – and saving more – for their futures. This bill will help Americans approach old age with the confidence and dignity they deserve after decades of hard work and sacrifice.”
“Ensuring Americans have the resources they need for a prosperous retirement is a bipartisan priority – and I’m glad that Chairman Neal and I were able to come together again to build on our work from the SECURE Act,” added Rep. Brady. “Our legislation will make it easier for folks to save, protect Americans’ retirement accounts, and give workers more peace of mind as they plan for the future.”
According to the congressmen, the Securing a Strong Retirement Act of 2020 will:
- Promote savings earlier for retirement by enrolling employees automatically in their company’s 401(k) plan, when a new plan is created;
- Create a new financial incentive for small businesses to offer retirement plans;
- Increase and modernize the existing federal tax credit for contributions to a retirement plan or IRA (the Saver’s Credit);
- Expand retirement savings options for non-profit employees by allowing groups of non-profits to join together to offer retirement plans to their employees;
- Offer individuals 60 and older more flexibility to set aside savings as they approach retirement;
- Allow individuals to save for retirement longer by increasing the required minimum distribution age to 75;
- Allow individuals to pay down a student loan instead of contributing to a 401(k) plan and still receive an employer match in their retirement plan;
- Make it easier for military spouses who change jobs frequently to save for retirement;
- Allow individuals more flexibility to make gifts to charity through their IRAs;
- Allow taxpayers to avoid harsh penalties for inadvertent errors managing an IRA that can lead to a loss of retirement savings;
- Protect retirees who unknowingly receive retirement plan overpayments; and
- Make it easier for employees to find lost retirement accounts by creating a national, online, database of lost accounts.
