The Effects of Required Minimum Distribution Rules on Withdrawals from Traditional IRAs

50 Pages Posted: 21 Apr 2016 Last revised: 30 Nov 2018

See all articles by Jacob Mortenson

Jacob Mortenson

Joint Committee on Taxation, US Congress

Heidi Schramm

Joint Committee on Taxation, U.S. Congress

Andrew Whitten

U.S. Department of the Treasury - Office of Tax Analysis (OTA)

Date Written: November 28, 2018

Abstract

We study the effects of Required Minimum Distribution (RMD) rules on the asset decumulation behavior of retirees with Traditional Individual Retirement Arrangements (IRAs). Using a panel of administrative tax data from 2000 to 2013, we estimate that 52% of individuals would prefer to withdraw less than their required minimum but that over one third of these RMD-constrained individuals did not respond to a temporary suspension of the rules in 2009. This paper is the first to identify causal effects of RMD rules and to show that the rules represent a binding constraint for the majority of IRA holders.

The appendix for "The Effects of Required Minimum Distribution Rules on Withdrawals from Traditional Individual Retirement Accounts" may be found at http://ssrn.com/abstract=2859088.

Keywords: Asset decumulation, income taxation, Individual Retirement Accounts, investment, required minimum distributions, retirement

JEL Classification: D14, H24

Suggested Citation

Mortenson, Jacob and Schramm, Heidi and Whitten, Andrew, The Effects of Required Minimum Distribution Rules on Withdrawals from Traditional IRAs (November 28, 2018). Available at SSRN: https://ssrn.com/abstract=2764435 or http://dx.doi.org/10.2139/ssrn.2764435

Jacob Mortenson

Joint Committee on Taxation, US Congress ( email )

502 Ford House Office Building
Washington, DC 20515
United States

HOME PAGE: http://www.jacobmortenson.com

Heidi Schramm (Contact Author)

Joint Committee on Taxation, U.S. Congress ( email )

H2-502 Ford House Office Building
Washington, DC 20515
United States

Andrew Whitten

U.S. Department of the Treasury - Office of Tax Analysis (OTA) ( email )

1500 Pennsylvania Ave., N.W.
Washington, DC 22203
United States

HOME PAGE: http://rawhitten.com

Register to save articles to
your library

Register

Paper statistics

Downloads
140
rank
195,135
Abstract Views
824
PlumX Metrics