The rules about RMDs are strict, and penalties are costly.
Are big changes coming to RMDs? An executive order may lead to changes that will have a big impact for 401(k) account owners and businesses.
During a visit to Charlotte, North Carolina, President Trump signed an executive order that directs the Department of Labor to ease rules on MEPs—small business Multiple Employer Retirement Plans. He also told the Treasury Department to take a closer look into RMS requirements.
Think Advisor’sarticle,“Trump Orders Review of 401(k) Withdrawal Rules, New Rules for MEPs,”reports that Trump’s executive order is designed “to extend the incredible benefits of retirement savings accounts, such a big thing, to American workers employed at small businesses all across our nation,” Trump said.
Trump went on to say that this would provide “retirement security to countless American workers and their families. We believe all Americans should be able to retire with the confidence, dignity and economic security that they want.”
Trump explained at the signing that the “complexity of current federal regulations makes it extremely difficult for small businesses to afford retirement savings accounts for their great employees. While large companies can afford to deal with these burdensome regulations, small companies just can’t handle it.”
“This means that 50% of Americans employed at small businesses with fewer than 100 employees, don’t have access to 401(k)s or other retirement plans,” he said.
For this reason, Trump said he’s lowering the costs of retirement plans, so they can become an affordable option for businesses of all sizes. “Small businesses”, Trump said, “will no longer be at a competitive disadvantage and small business workers will now be treated more fairly and have more choices.”
Trump said his executive order decreases the “regulatory barriers,” so small businesses are able to create “low-cost association retirement plans,” also called multiple employer plans, or MEPs.
The IRS requires people who own retirement savings accounts to start taking withdrawals starting at age 70 ½. The rules about RMDs are strict, and penalties are costly.
Reference: Think Advisor (August 31, 2018) “Trump Orders Review of 401(k) Withdrawal Rules, New Rules for MEPs”