There is a good chance that the lame-duck session of Congress may approve the “Retirement Enhancement and Savings Act of 2016” before the end of the year. This bill was passed unanimously by the Senate Finance Committee earlier in October.
Among the many changes that are included with the new law are:
- Under current law, a non-spouse inheriting an IRA can generally take required minimum distributions (RMDs) over his or her life expectancy. The bill eliminates this benefit and requires the distributions to be taken based on the deceased person’s calculated life expectancy.
- The prohibition on the ability to make contributions to a traditional IRA by individuals who have reached 70 1/2 would be repealed.
- The bill has provisions encouraging the use of annuities in retirement plan distributions.
The bill also features other technical changes to the tax rules for qualified retirement plans and IRAs.
We will keep you informed on this new bill.