Trump order seeks to ease retirement account rules for required withdrawals

by
August 31, 2018

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President Trump is looking for ways to make it easier for Americans to save and spend in retirement.

Specifically, an executive order the President is expected to sign Friday will seek a review of how required minimum distributions from 401(k) plans and individual retirement accounts are calculated, and for regulators to see how small businesses can more easily band together to offer retirement plans to their workers.

As it stands, retirees must begin taking withdrawals, or RMDs, at age 70½. The amount they must take out annually is based on life expectancy tables issued by the IRS. The purpose of reviewing the rules would be to update those tables and allow account holders to take lower RMDs. (Roth versions of 401[k] plans and IRAs do not come with mandated distributions until after the death of the owner.)

Meanwhile, small businesses face obstacles in teaming up to offer 401(k) plans because current law allows only related businesses — i.e., members of a trade association — to join forces in so-called multiple employer plans.

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