Senate Finance Committee ranking member Ron Wyden, D-Oregon, released a discussion draft on September 8 of his proposed Retirement Improvements and Savings Enhancements (RISE) Bill. The Bill contains many taxpayer-friendly provisions.
One notable change put forward by the Bill would increase the age for taking required minimum distributions (RMDs). This proposed change could prove beneficial to many taxpayers in that it would allow for an additional three years of income accumulation on a “tax-deferred” basis.
Under the current tax rules, taxpayers generally must start taking withdrawals from IRA, SIMPLE IRA, SEP IRA or retirement plan accounts when they reach age 70½. The new plan proposed by Senator Wyden would increase the RMD age to 73. The RISE Bill would also relax the RMD rules for individuals who reach the required age with balances in their retirement plans of less than $150,000.
Additionally, Senator Wyden proposed eliminating Roth conversions for IRAs and employer-sponsored plans. “It’s time to face the fact that our tax code needs a dose of fairness when it comes to retirement savings, and that starts with cracking down on massive Roth IRA accounts built on assets from sweetheart, inside deals,” Senator Wyden said in a statement. The Bill would also prohibit further contributions to a Roth IRA if its total value exceeded $5 million.
The proposal also contains several provisions that are geared toward encouraging retirement savings. The discussion draft calls for allowing employers to make matching contributions to a Code Section 401(k) retirement plan while employees make payments toward their student loans. Additionally, the “Saver’s Credit” would be refundable under the proposal.
We will keep you informed of the RISE Bill as it moves through the process.
Should you have questions or comments, please contact Bob Grossman or Don Johnston at 412-338-9300.
