Estes’ bipartisan bill provides retirement savings freedom to senior citizens

U.S. Rep. Ron Estes (R-KS) last week introduced a bipartisan bill that would increase the required beginning age for mandatory retirement distributions and would exempt individuals with lower account balances from such rules.

“Since my time as Kansas State Treasurer, I’ve focused on increasing retirement security for Kansans and, now, seniors across the United States,” Rep. Estes said. “This bill builds on bipartisan reforms passed in the SECURE Act, allowing seniors more freedom to choose when they receive their retirement savings.”

Rep. Estes on Oct. 9 cosponsored the Required Minimum Distribution Modernization Act of 2020, H.R. 8567, with bill sponsor U.S Rep. Stephanie Murphy (D-FL) to improve the required minimum distribution rules that apply to retired workers. The bill would apply to defined contribution accounts like 401(k)s, 403(b)s, governmental 457(b) accounts, IRAs and Designated Roth IRAs.

Under current law, retirees generally must start making withdrawals from their tax-deferred retirement accounts when they turn age 72 or face a financial penalty, according to information provided by Rep. Estes’ staff.

If enacted, H.R. 8567 would increase the age to 75 and would exempt individuals with account balances below $100,000 from the required minimum distribution rules to allow them to begin withdrawing funds at any age without incurring a penalty.

“Exempting retired workers with smaller accounts from the mandatory withdrawal rules removes an unnecessary obstacle that prevents them from having greater control over their financial planning and allows their accounts to continue to grow during retirement,” added Rep. Murphy.

The measure has been referred to the U.S. House Ways and Means Committee for consideration.