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Congress looking to change or even abolish this key 401(k) provision - Government & Private Jobs in Pakistan

Congress looking to change or even abolish this key 401(k) provision

Read Time:1 Minute, 33 Second

The SECURE Act, which was signed into law last December, included a provision that pushed up the age for mandatory retirement plan distributions from 70 to 72.

Now, lawmakers are hoping to pass another retirement bill that’s being informally called SECURE Act 2.0 by early next year.

A provision in the bill would push distributions up even further, to age 75.

And don’t look for Congress to stop there. “My goal is to get rid of it completely,” House Ways and Means Ranking Member Kevin Brady (R., Texas) said of the age restriction during an appearance at the Bipartisan Policy Center Solutions Summit simulcast on Yahoo Finance.

He said the pending legislation, which he helped author, takes “another step forward in increasing that age to 75 and exempting those more modest accounts of $100,000 or less.”

What’s in the bill

Brady’s partner on the bill, the Democratic House Ways and Means Chairman Richard Neal (D., Mass.), has also voiced support for the provision. He noted in a recent Yahoo Finance Present interview that “people are living longer, they’re going to work longer.”

The argument for an age restriction – which is noted in an official summary of the bill – is “to ensure that individuals spend their retirement savings during their lifetime and not use their retirement plans for estate planning purposes to transfer wealth to beneficiaries.”

The bill, as currently written, would change the rule for any required distributions in 2021 and beyond. The legislation would also exempt retirees from minimum distributions for the rest of their life if they have less than $100,000 in all of their retirement plans at age 75. (As it stands now, when you reach age 72, you’re required to withdraw a certain amount of money from your retirement accounts each year and pay taxes on that amount.)

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