Illinois Law Professor Kaplan on “Reforming Taxation of Retirement Income”

University of Illinois Law Professor Richard Kaplan responded to my post last week, that questioned the appropriate age to compel IRA distributions, by providing a more in-depth look at the topic, via his own article, Reforming Taxation of Retirement Income.  

His recommendations include simplifying how Social Security retirement benefits are taxed, bifurcating defined contribution plan withdrawals into capital gains and ordinary income components, repealing certain exceptions to the early distribution penalty, reducing the delayed distribution penalty and adjusting the age at which it is triggered, and changing the residential gain exclusion to avoid unanticipated problems with reverse mortgages.

The 2012 Virginia Tax Review article demonstrates that increased life expectancy supports an increase to age 74 (from 71.5) as the trigger for mandatory distributions.  

Thanks, Dick!  As always, you have important analysis to share.