Updated Saturday, August 2, 2014 as of 12:37 AM ET
Blogs - Rethinking Retirement
Required Minimum Distributions for Roth IRAs?
Wednesday, March 5, 2014

This one’s simple. If you have $100,000 or less - across all of your retirement plans combined - you would be exempt from required minimum distributions. Failing to take the proper RMD amount comes with one of the stiffest retirement account penalties there is, a 50% penalty on any shortfall.

This proposal would eliminate that possibility if you have $100,000 or less in retirement accounts and would allow you to take as much, or as little, as you want without a penalty.


Non-spouse beneficiaries would be allowed to move inherited retirement savings from one inherited retirement account to another inherited retirement account via a 60-day rollover (in a manner similar to which they can currently move their own retirement savings).

Unifying the rollover rules for retirement account owners and beneficiaries would greatly simplify this aspect of retirement accounts and reduce the number of irrevocable and costly mistakes that are often made by beneficiaries under the current rules.


Employers in business for at least two years that have more than 10 employees and don’t offer another retirement plan already would be required to offer auto-enrollment IRAs to their employees. Contributions to employees’ IRAs would be made on a payroll-deduction basis.

Employees would be able to elect how much of their salary they wish to contribute to their IRA (up to the annual IRA contribution limit), including opting out entirely. In the absence of any election, 3% of an employee’s salary would be contributed to their IRA. Employees would be able to choose whether to contribute to an IRA or Roth IRA, with the Roth being the default option.

The provision would also enhance incentives, in the form of a tax credit for small businesses, to adopt a company-sponsored retirement plan.

Jeffrey Levine, CPA, is an IRA Technical Consultant with Ed Slott and Company specializing in IRA distribution planning. He is also a speaker for national conferences, CPA continuing education programs, web-based conferences and client seminars. This originally appeared on www.theslottreport.com.

Read more:


(8) Comments
Consider this all Caps? I will want to AMEND ALL my personal tax returns since 2009! I can't read any more of the above past the second paragraph (yet)!
Posted by Bruce B | Wednesday, March 05 2014 at 4:21PM ET
Add your comments here.
Posted by Fred J | Wednesday, March 05 2014 at 5:21PM ET
I thought more about the topic and believe if Congress really approved this they would also likely Grandfather Existing Roth's to not require RMDs. (I also realize tax returns have a statute of limitations for amending.) I have paid a high price for the Roth IRA's I have in place. Back to the topic - thanks Jeffrey!
Posted by Bruce B | Wednesday, March 05 2014 at 7:21PM ET
I continue to be amazed by this President's lack of understanding and downright stupidity. It further enforces my belief that no one should be allowed to run for President without actually having held a real private-sector job as a qualification!!!!


Posted by Glenn S | Thursday, March 06 2014 at 11:07AM ET
Some of those proposals make us, the financial planners, look really bad. Can you imagine at our suggestions our clients pay the tax & convert to Roth, only to find out later the rule changed again? The lawsuit, lots of them, are waiting to happen. Whose fault is it?

In addition, practically speaking how are you doing to tax the 401k w/d again in the future? If you pay 28% tax on it now, when you w/d, do you have to pay the tax again? Yes, one can argue maybe a separation at the account set up. However, can you imagine once again the paperwork required & new software updates to this change?

Why can't the President just leave people's retirement account alone? If he truly stands for the low-income class people, he can ask his Hollywood friends to start to adopt poor families. They all own huge mansions & servants. Wouldn't that be a new change?

Posted by rose s | Thursday, March 06 2014 at 12:42PM ET
Post a Comment
You must be registered to post a comment.
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.
2014 Summer Reading List for Advisors

Current Issue

The June Issue is now online!


Industry Events

August 10, 2014 |

September 9, 2014 |

September 17, 2014 |

September 20, 2014 |

September 28, 2014 |

Already a subscriber? Log in here