Individual Seeks Deletion of Provision in RMD Regs

PUBLIC SUBMISSION

Docket: IRS-2022-0003
Required Minimum Distributions (REG-105954-20)

Comment On: IRS-2022-0003-0001
Required Minimum Distributions

Document: IRS-2022-0003-0003
Comment from Shapiro, Michael

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Submitter Information

Name: Michael Shapiro

Address:

NJ,

Email: mdshapirolaw@gmail.com

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General Comment

February 28, 2022

The proposed regulations contain rules that suggest that, when the 5-year rule or the 10-year rule applies, required minimum distributions must be paid in years preceding the 5th or 10th year, as the case may be. These rules are contrary to the statute, as well as prior final regulations.

The 5-year rule has been in the regulations since 1985. That rule has never been interpreted, including by IRS, Treasury, and the courts, to mandate that required minimum distributions must be paid in any year preceding the 5th year. The SECURE Act's 10-year rule incorporates the 5-year rule. Section 401(a)(9)(H) provides:

"In the case of a defined contribution plan, if an employee dies before the distribution of the employee's entire interest — 

(i) In general. — Except in the case of a beneficiary who is not a designated beneficiary, subparagraph (B)(ii) — 

(I) shall be applied by substituting “10 years” for “5 years”, and

(II) shall apply whether or not distributions of the employee's interests have begun in accordance with subparagraph (A)."

Because the 10-year general rule of Section 401(a)(9)(H) incorporates the 5-year rule by reference, and because the 5-year rule applies only in the case where required minimum distributions for a designated beneficiary do not commence in the year after the year when the participant died, there can be no requirement to make any distributions to a non-Eligible Designated Beneficiary during any year preceding the year containing the 10th anniversary of a deceased plan participant's death.

The proposed regulations should be amended to remove the requirement that distributions be made prior to the 5th or 10th anniversary of the participant's death, both because the regulations interpreting the 5-year rule, which rule was not amended by the SECURE Act, are already final and because such rule is contrary to the statute.