Washington, DC – The ERISA Industry Committee (ERIC) is asking the Internal Revenue Service (IRS) for guidance on three provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). Specifically, ERIC is asking for guidance on the required minimum distribution rules, withdrawals in case of birth or adoption, and nondiscrimination testing relief for closed plans.
“ERIC appreciates the IRS’s work during the COVID-19 pandemic to allow Americans more financial flexibility during this unprecedented time,” said Aliya Robinson, Senior Vice President of Retirement and Compensation Policy, ERIC. “And now, additional guidance is needed to ensure uniform implementation of the SECURE Act. We believe the clarifications we are asking for will give plan sponsors and beneficiaries the proper tools to aid in retirement security.”
ERIC’s requested guidance on required minimum distribution rules focuses on several areas:
- Clarification that a plan would not be disqualified if it makes a distribution in 2020 for someone who turns 70.5 this year
- Allowing flexibility in the determination of whether a distribution that would have been a required minimum distribution (RMD) prior to the SECURE Act is eligible for a rollover
- Confirmation that the remedial amendment provision under section 601 covers any anti-cutback issues that might occur due to the change to the RMD
In response to concerns shared by ERIC member companies, ERIC is also requesting confirmation that withdrawals upon the birth or adoption of a child as of January 1, 2020, are optional, as well as clarification concerning whether a plan that does not accept after-tax contributions would be compelled to create an after-tax source to hold these repayments.
Additionally, ERIC is asking for clarification that the SECURE Act will not penalize plan sponsors who, in good faith, implemented changes to allow their closed plans to satisfy nondiscrimination testing based on pre-SECURE Act requirements.
“By addressing the issues raised by ERIC, the IRS will provide a clear path for all plan sponsors and beneficiaries to follow as they continue to navigate through these uncertain times,” said Robinson.
Click here to read ERIC’s letter to the IRS.