Distribution moratorium doomed

Lack of 'political oomph' in time of deficit

Feb 7, 2010 @ 12:01 am

By Jessica Toonkel Marquez

Bills introduced recently to give seniors another year's grace on required minimum distributions from retirement accounts won't get any traction in Congress, according to experts.

The most recent bill, HR 4421, which was introduced last month by Rep. Joe Sestak, D-Pa., would extend the one-year moratorium on distributions established under the Worker, Retiree and Employer Recovery Act of 2008 through this year. Mr. Sestak's bill joins similar proposals S 157 and HR 424.

Under the minimum-required-distribution rules that went back into effect this year, workers must start receiving life-expectancy-based minimum payments from their retirement plans when they reach 701/2.

The initial moratorium was enacted in the wake of the 2008 market crash and during the presidential campaign, noted James M. Delaplane Jr., a partner at Davis & Harman LLP. “A lot of seniors were talking about it,” he said.

But the climate has changed, and there isn't as much interest in passing these bills, Mr. Delaplane said, noting that lawmakers aren't hearing from senior citizens on this issue like they did during the market meltdown.

“There doesn't seem to be any appetite in Congress for this,” Mr. Delaplane said. “There is no political oomph, and given the deficits, this isn't appealing legislation.”

Advisers should be managing older clients' assets on the assumption that the required-minimum distributions will apply this year, said David L. Wolfe, a partner at Drinker Biddle & Reath LLP.

“The market has rebounded, but it hasn't completely come back, and to the extent that we could still see some market reversals in 2010, this could be an issue for clients,” he said.

E-mail Jessica Toonkel Marquez at jmarquez@investmentnews.com.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Behind the scenes at Pershing Insite 2018

What goes on behind the scenes at one of the industry's biggest conferences? Join us for an all-access sneak peek!

Latest news & opinion

Divorce reduces retirement readiness

The new tax law could increase financial challenges for divorced people, but planning opportunities abound.

Merrill Lynch fined $42 million for misleading customers

In addition to the practice of 'masking' trades, the wirehouse went to extremes to cover up the wrongdoing.

Advisers with billions in AUM leaving Wall Street

Merrill Lynch has seen two teams exit recently, each with more than $4 billion in client assets.

Wells Fargo weighs changes to wealth unit

The move would reflect the bank's effort to cut $4 billion in costs.

Small broker-dealers seek legislative relief from annual audits

Bills introduced in House, Senate would remove PCAOB requirement.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print