IRA Required Minimum Distributions may soon be deferred to age 72
The House of Representatives has passed The Secure Act, which makes some major changes in IRA and retirement plan savings and distribution rules. These changes, if enacted, will have a significant impact on our clients and their families.
One provision, relating to retirement savings, repeals the prohibition against contributing to IRAs after the age of 70 ½, which would be great news for working seniors. The change garnering the most attention, though, is the proposal to raise the age for required minimum distributions from 70 ½ to 72.
Unfortunately, the ability to stretch out distributions from an IRA to children and grandchildren is likely be affected as well. Under this bill, IRAs and retirement plan beneficiaries will be required to distribute all plan assets and pay taxes within 10 years after the IRA owner dies.
There is still an exception for the owner’s spouse, and there are several other exemptions as well, but the vast majority of children, grandchildren, or other non-spouses who are IRA beneficiaries will be affected.
The House bill doesn’t change the ability of IRA owners to make charitable gifts from required minimum distributions.
The corresponding bill in the Senate, RESA, has some different provisions, and does not raise the age for required minimum distributions. Both chambers must agree on a reconciled bill to bring to the President for signature, so we will keep you informed as the changes, which would probably take effect January 1, 2020, are finalized.