The Effects of Required Minimum Distribution Rules on Withdrawals from Traditional IRAs
50 Pages Posted: 21 Apr 2016 Last revised: 30 Nov 2018
Date Written: November 28, 2018
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: Suggested Citation