Distribution, Health Premium Rules Also Targeted

The Portman-Cardin bill also would revise the “minimum required distribution” rules applying in the TSP and in similar retirement programs that force individuals to begin taking out their money at age 70 1/2. The measure would raise the starting age to 75, while reducing the excise tax for those who fail to take their proper distributions from 50 percent to 20 percent of the amount that should have been distributed but was not. It further would make retirees eligible to pay health insurance premiums with pre-tax money from annuity payments, similar to the “premium conversion” arrangement now in effect for actively employed federal workers and many private sector workers. Separate legislation (HR-1231 and S-623) to allow that tax break for federal retirees previously was offered in Congress.