ACLI Makes 3 Suggestions for Final RMD Regs
ACLI Makes 3 Suggestions for Final RMD Regs
- Institutional AuthorsAmerican Council of Life Insurers
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- Tax Analysts Document Number2020-1429
- Tax Analysts Electronic Citation2020 TNTF 9-20
January 7, 2020
Internal Revenue Service
CC:PA:LPD:PR (REG-132210-18)
1111 Constitution Avenue NW
Room 5203
Washington DC 20224
Subject: Updated Life Expectancy and Distribution Period Tables Used for Purposes of Determining Minimum Required Distributions
Greetings:
On behalf of the American Council of Life Insurers (ACLI)1, we appreciate the opportunity to provide comments in response to the Department of the Treasury/Internal Revenue Service (IRS) Notice of Proposed Rulemaking (NPRM) that would update the life expectancy and distribution period tables used to calculated required minimum distributions from qualified retirement plans under Internal Revenue Code Section 401(a)(9). The NPRM was issued in response to Executive Order 138472, which directed the Secretary of the Treasury to examine the life expectancy and distribution period tables in the regulations on required minimum distributions from retirement plans and determine whether they should be updated to reflect current mortality data, and whether such updates should be made annually or on another periodic basis. As a result of its examination, Treasury and IRS determined that the life expectancy and distribution tables in §1-401(a)(9)-9 should be updated to reflect current life expectancies.
ACLI supports public policy proposals to update the RMD mortality tables. The average life expectancy in the United States has increased substantially. Today, a typical 65-year old can expect to spend 20 or more years in retirement. Based on life expectancy trends, Americans born today must plan for at least five more years of retirement than previous generations did.
We have reviewed the comment letter submitted by the Committee of Annuity Insurers3 (CAI). ACLI shares the concerns contained therein and supports and agrees with the recommendations made in the CAI letter. Specifically, ACLI recommends that final regulations —
(1) Utilize the 2012 Individual Annuity Reserving Table, as published by the Society of Actuaries. Use of this table will, consistent with the President's Executive Order, allow plan participants and IRA owners to retain their retirement savings over a longer period of time.
(2) Permit the updated Uniform Lifetime Table to be used in applying the Minimum Income Threshold Test (MITT), subject to a 5% cap on scheduled benefit increases. This would eliminate a significant barrier to life annuities imposed by the current MITT rules.
(3) Provide that the RMD mortality tables will be updated every 10 years, but not more frequently. Updating the tables every 10 years recognizes the need to provide updated RMD mortality tables, while minimizing the administrative burdens of implementing new tables more frequently.
* * * * *
On behalf of the ACLI member companies, thank you for your consideration of these comments.
Respectfully,
James H. Szostek
Howard M. Bard
American Council of Life Insurers
Washington, DC
FOOTNOTES
1The American Council of Life Insurers (ACLI) is the leading trade association driving public policy and advocacy on behalf of the life insurance industry. 90 million American families rely on the life insurance industry for financial protection and retirement security. ACLI's member companies are dedicated to protecting consumers' financial wellbeing through life insurance, annuities, retirement plans, long-term care insurance, disability income insurance, reinsurance, and dental, vision and other supplemental benefits. ACLI's 280 member companies represent 94 percent of industry assets in the United States. ACLI member companies offer insurance contracts and other investment products and services to qualified retirement plans, including defined benefit pension and 401(k) arrangements, and to individuals through individual retirement arrangements (IRAs) or on a non-qualified basis. ACLI member companies also are employer sponsors of retirement plans for their own employees.
283 Fed. Reg. 45321 (Aug. 31, 2018).
3We note that all 31 CAI member companies are also ACLI members.
END FOOTNOTES
- Institutional AuthorsAmerican Council of Life Insurers
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- Tax Analysts Document Number2020-1429
- Tax Analysts Electronic Citation2020 TNTF 9-20
