In case you missed it, sweeping new rules on distributions from IRA And Qualified Retirement Plans (QRPs) went into effect at the beginning of 2022.
With the pandemic, high inflation rate, Federal Reserve tightening and other crises preoccupying attention, it is understandable if you did not know about the important new rules affecting retirement planning.
On December 20, 2019, President Donald J. Trump signed into law the SECURE Act (Setting Every Community Up for Retirement Enhancement” Act). On February 23, 2022, the IRS issued proposed regulations implementing the law. These regulations detail specifics of how the new law is to be enforced.
While the rules are only proposed and have not been finalized, it is wise to update personal tax and financial plans based on rules proposed by the IRS. While they may be changed or augmented, acting as if proposed IRS rules are final is prudent. The new distribution IRA and QRP rules implement new tax law contained in SECURE Act regarding:
- Required minimum distribution requirements
- Distributions commencing during an employee's lifetime
- Death before the required beginning date (RBD) for distributions
- Who is a designated beneficiary?
- Required minimum distributions (RMDs) from defined contribution plans
- Required minimum distributions from defined benefit plans and annuity contracts
- Rollovers and transfers from IRAs and QRPs
IRAs and other federally qualified retirement plans are central to personal financial planning, impacting estate and income tax as well as retirement planning. The new rules affect a complex and technical tax topic.