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

InvestmentNews celebrates diversity & inclusion in the financial advice business

Highlights of the Excellence in D&I Awards, showcasing the achievements of 26 individuals and firms that are moving the needle when it comes to diversity and inclusion.

Latest news & opinion

Divided we stand: How financial advisers view President Trump

InvestmentNews poll finds 49.2% approve of his performance, while 46.7% disapprove. How has that changed over the course of his presidency?

10 states with the most college student debt

Residents of these states have the most student debt when you consider their job opportunities.

Ex-Wells Fargo brokers sue for damages, claiming they lost business in wake of scandals

In a Finra arbitration complaint, two brokers allege that Wells Fargo's problems damaged their business.

Invesco to buy OppenheimerFunds

Deal brings Invesco another $246 billion in assets, as well as high-fee actively managed funds.

Dawn Bennett found guilty of $20 million Ponzi scheme

Jury took less than five hours to convict the former financial adviser and radio host.

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