Debate: What If Roth IRAs Had Lifetime RMDs, Too?

Under current law, owners of Roth IRAs are not required to take required minimum distributions (RMDs) during their lifetime (beneficiaries who inherit Roth accounts are, however, subject to RMD rules). Owners of traditional IRAs, on the other hand, are required to start taking RMDs once they reach age 72.

Proposals have been floated to change those rules so that the same lifetime RMD rules would apply to both traditional accounts and Roth accounts.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about proposals to harmonize the RMD rules for both Roth and traditional retirement accounts.

Below is a summary of the debate that ensued between the two professors.

Their Votes:

Bloink

Byrnes

Their Reasons:

Bloink: A Roth IRA or Roth 401(k) is granted certain tax benefits as an incentive to save for income during retirement. Under current law, many of these Roth accounts end up functioning more like tax-preferred estate planning vehicles. This just gives wealthy Americans yet another way to game the system and pass wealth to their heirs without paying their fair share of taxes. 

Byrnes: Roth accounts are fundamentally different from traditional retirement accounts. Account owners have already paid taxes on these funds. The entire point of the Roth account is to create a tax-free source of income to draw from in retirement. If Roths and traditional accounts are subject to the same RMD rules, where’s the incentive for taxpayers to diversify and fund these accounts over pretax retirement accounts that provide a current income-reduction benefit?