Impacting IRAs: The RISE Act, the DOL Fiduciary Rule & 60-Day Rollover Appeals
Just back from the Fall Conference for the Retirement Industry Trust Association with some news about Self-Directed IRAs.
More Retirement Savings
For over 40 years you’ve been able to invest your retirement savings outside of the Stock Market into assets like real estates, notes, trust deeds, precious metals, private stock and more. Updated statistics from the conference: There is $24.5 Trillion in overall retirement assets. $7.5 Trillion of that is in IRA accounts. In the year 2000 there was $11.6 Trillion in retirement savings overall, so you can see this figure has more than doubled in the past 15 years.
News on the 60-Day Rollover
On Aug. 24, 2016 the IRS changed its appeals process for those who miss the 60-day deadline. (Rev. Proc. 2016-47) Now, with some “self-certification” legwork, you can fix the problem yourself. In a typical 60-day rollover, a person will take a personal distribution from one of their retirement accounts. Then, within 60 days, they deposit it into another retirement account.
The IRS says that a taxpayer may make a written certification to a plan administrator or an IRA trustee that a contribution satisfies the conditions in Section 3.02 of this revenue procedure. This self-certification has the effects described in Section 3.04 of this revenue procedure. Taxpayers may make the certification by using the model letter (provided by the IRS) on a word-for-word basis or by using a letter that is substantially similar in all material respects. A copy of the certification should be kept in the taxpayer’s files and be available if requested on audit.
If you believe your 60-day rollover should not be a taxable event, discuss this with your tax professional.
The RISE Act
Senator Ron Wyden, who is a Democrat on both the Senate Committee on Finance the Subcommittee on Taxation and IRS Oversight, came out with a proposal called the RISE Act.
The proposal has more than a dozen provisions including:
- Raising the age for Required Beginning Date for Required Minimum Distributions
- Requiring valuations for IRA asset acquisitions
- Prohibiting investing in assets acquired at less than fair market value
- Elimination of Roth conversions
- Roth IRAs would be subject to Required Minimum Distributions
- Exempting small IRAs from RMDs (where account value is less than $150,000)
You can submit comments on the proposal to Retirement_Savings@finance.senate.gov. This proposal is open for commentary until December 8, 2016.
DOL’s Fiduciary Rule
This year the Department of Labor announced its Fiduciary Rule. To say this rule has caused controversy is an understatement. There are six lawsuits filed against this legislation.
The fiduciary rule redefines who is now a fiduciary and further clarifies the difference between “education” and “advice.” It’s important now for you to understand the relationship changes for your advisors, as the regulation impacts advice about a 401(k) and IRA rollover or distribution.
As providers of Self-Directed IRAs our industry is largely exempt from this ruling since we do not provide advice or recommend investments. We recommend the account-holder seek advice from a competent investment, tax or legal professional before moving forward.
Again there is pending litigation so expect some changes. This new rule takes effect in April of 2017.
To learn how to self-direct your IRA, reach out to us at uDirect IRA Services. You can find us at www.uDirectIRA.com