John McCain has found another opportunity to offer a unneeded tax break for the wealthy in, of all places, a new "solution" to the recent plunges in stock prices.

Yesterday, in a speech in La Crosse, Wisconson, McCain proposed a new change to the tax laws:

We must also protect investors --
especially those relying on their investments for retirement.  Current
rules mandate that investors must begin to sell off their IRAs and
401Ks when they reach age 70 and one half.  To spare investors from
being forced to sell their stocks at just the time when the market is
hurting the most, those rules should be suspended.

The reference here is to the minimum distributions required under the Internal Revenue Code for all retirement plans.  The purpose of the required distribution rules is to make sure that retirement funds are actually used for retirement and not invested tax-free indefinitely.  So, beginning with the year a person reaches age 70-1/2, the person must begin taking distributions that are calculated to spread the retirement income over the person's life expectancy.

There are several things wrong with McCain's proposal, the most important of which is that it "solves" a problem that doesn't exist, because there is nothing in the Internal Revenue Code or any regulation or ruling that says that retirement plan distributions must be made in cash.  If the owner of IRA or 401(k) wants to keep the investments instead of selling them, the investments themselves can be distributed in what is known as an "in kind" distribution.

So, contrary to what McCain claims, the present rules do not require retirees to "sell off their IRAs and 401ks".

For most retirees, the minimum required distribution rules aren't really really needed, because they need the retirement distributions as part of their retirement income.  It is the wealthy who don't need the mandatory distributions because they have other income, and it is the wealthy who don't want the mandatory distributions because they would rather defer any income tax on the distributions and continue investing the retirement funds tax-free.

Last, but not least, minimum required distributions are usually made in December, and it is difficult to believe that sales of securities to make cash distributions from retirement plans have had any impact on stock prices in the past, or will have any impact on stock prices in the future.

What we are seeing is another naked grab by the McCain campaign for another tax break for the rich, making false claims about the law and using the current state of the stock market as an excuse.

It is so plainly pandering to the wealthy as to be disgusting.