Joint Trades Request for Immediate Guidance Needed to Extend RMD and SECURE Act Effective Dates
Summary
SIFMA in a joint letter with other associations provided comments to the Treasury Department and IRS to promptly issue guidance that (1) extends the deadline for amending qualified plan and IRA documents to reflect the SECURE Act’s changes to the required minimum distribution (RMD) rules, and (2) delays the effective date of the new proposed regulations on RMDs.
SIFMA signed with the following:
American Benefits Council
American Council of Life Insurers
Committee of Annuity Insurers
Finseca
Insured Retirement Institute
Investment Company Institute
National Association of Insurance and Financial Advisors
National Association of Professional Employer Organizations
Retirement Industry Trust Association
Securities Industry and Financial Markets Association
Small Business Council of America
The SPARK Institute
See related: SIFMA Request for Immediate Guidance Needed to Extend RMD and SECURE Act Effective Dates
Excerpt
March 25, 2022
DELIVERED ELECTRONICALLY
Internal Revenue Service
Attn: CC:PA:LPD:PR (REG-105954-20)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Re: Immediate Guidance Needed to Extend RMD and SECURE Act Effective Dates
We are writing on behalf of the undersigned organizations to urge the Treasury Department and IRS to promptly issue guidance that (1) extends the deadline for amending qualified plan and IRA documents to reflect the SECURE Act’s changes to the required minimum distribution (RMD) rules, and (2) delays the effective date of the new proposed regulations on RMDs.1
(1) The deadline for amending plans and IRAs to reflect the SECURE Act should be delayed at least one full plan year (calendar year for IRAs) from the later of (1) the effective date of final RMD regulations or (2) the date the IRS publishes updated Listings of Required Modifications (LRMs).
The SECURE Act provides that qualified plans and IRAs must amend their governing documents to reflect the SECURE Act by the last day of the first plan year beginning on or after January 1, 2022, “or such later date as the Secretary of the Treasury may prescribe.”2 We urge the Treasury Department and IRS to exercise their delegated authority to extend this deadline to the last day of the first plan year (calendar year for IRAs) that begins after the later of (1) the effective date of final RMD regulations or (2) the date the IRS publishes updated LRMs. Note that while employers using individually-designed plans generally can wait to amend the plan until a change in the law is published on the Required Amendments List, those employers using calendar year pre-approved plans – which is the overwhelming majority of plans – would need to be amended by the end of 2022.
Revising plan and IRA governing documents is no small task. It requires extensive legal review and vetting, which is difficult in the absence of final rules. In addition, insurance companies that issue annuity contracts affected by the SECURE Act, such as 408(b) individual retirement annuities and 403(b) tax-sheltered annuities, typically must obtain approval from state insurance regulators to amend their forms, which takes time. We respectfully submit that it is not reasonable to expect any plan or financial institution to even start the process of amending their
1 The SECURE Act means sections 114 and 401 of the Setting Every Community Up for Retirement Enhancement Act of 2019, enacted on December 20, 2019, as part of Public Law No. 116-94.
2 SECURE Act § 601. The deadline for certain collectively-bargained and governmental plans is two years later. See also Notice 2020-68 § G-1 (confirming that the first deadline applies to IRAs).