Sen. Cardin Signals More RMD Relief in Next Stimulus

According to the Treasury Department's own numbers, "80% of people subject to RMDs take that amount or more because they need the money," Slott said. "Only 20% take the minimum. Eliminating lifetime RMDs also makes sense since the Secure Act did away with the stretch IRA (beginning in 2020) for most non-spouse beneficiaries anyway, forcing the funds out in 10 years after death. This provides an end date to most IRAs so there is no need to force money out before then. Now that we have this deadline on when the taxes will be eventually be paid, the RMD burden should be removed."

The government, Slott continued, "should want lifetime RMDs eliminated if only to bring in more revenue. The longer a person delays taking distributions, the more that builds up in that tax-deferred account, adding to the amount that will be taxed in the future."

The government, Slott added, "is a partner on these gains, and if tax rates increase (which is likely, given our deficits) then Uncle Sam reaps even more of this appreciation. An IRA is actually a receivable building for the tax man. The problem is that no one in Congress thinks long term. If they did, they would never have allowed the Roth IRA to be born."

During his webcast remarks, Cardin conceded that tax increases would have to be considered in light of the deficit caused by the coronavirus stimulus.

"When we get through the coronavirus a number of things are clear, we're going to get our economy back on track; we need to get our economy back on track," Cardin said. "It's the most important thing we could do for our gross domestic product and for our standard of living. But we're going to end up with a large deficit and the question is going to be: How are we going to pay for that? How are we going to tax in order to make sure we have the revenues to be responsible? To be able to perform essential services but also to reduce the amount of debt we have in the country? Certainly economic growth will help us, but we're going to need revenues."

— Related on ThinkAdvisor:

• SBA Has a Warning for Big Firms Taking Small-Business Loans
• Wade Pfau: Pandemic Tears Up 4% Rule
• 4 Tax Opportunities Created by Market Downturn, Stimulus