An executive order issued by President Donald Trump directing the Treasury Department to study easing the rules for required minimum distributions (RMDs) may not lead to new policies within the next six months, but changes could come faster if Congress takes up the cause.

The growing momentum in Washington to aid Americans’ retirement savings efforts could push the changes through one way or another, said Jamie Hopkins, director of the New York Life Center for Retirement Income at the American College of Financial Services.

While Treasury Department rulemaking is possible, legislation would be quicker, Hopkins said.

“Really what the EO does is direct Treasury to recalculate the life expectancy tables in the next six months, which could extend the age for RMDs,” Hopkins said.

“On one hand there is a natural understanding that people are living longer and you want to update life expectancy tables and extend them. That’s a perfectly reasonable idea,” said, Hopkins. The tables have not been updated since 2002.

But extending out the age for mandated drawdowns won’t be without political controversy. “In reality, extending RMDs only serves to create a tax benefit for the wealthiest individuals who don’t want to spend down their account,” he added. 

“The only benefit is to allow more money to grow tax advantaged for Americans who don’t need money today,” Hopkins said. “The majority of Americans need to draw down their retirement assets to live and a third don’t even have any retirement savings, so it’s really only the top 10% of the country that would benefit,” Hopkins said.

Politics aside, a Treasury Department rulemaking to change actuarial tables will be time-consuming, likely taking 18 months to two years, even if fast-tracked. “So many products and companies would be impacted by the changes—from employers and software companies to annuity, IRA and 401(k) providers.  These companies will all want to be involved and comment on changes that impact their businesses,” Hopkins said.

A faster route to pushing RMDs out past the current required age of 70 and one-half is legislation, he said.

House Ways and Means Chairman Kevin Brady (R-TX) has signaled his desire to push forward with the bipartisan Retirement Enhancement and Savings Act (RESA) before midterm elections.

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