IRS Revises the Required Minimum Distribution Tables

IRS tells us that we are going to live a little longer--or at least the RMD tables say that.

In newly released proposed regulations, IRS updated life expectancy tables, last updated in 2002, used for calculating required minimum distributions (RMD) from qualified retirement plans, IRAs and annuities.

A 70-year-old Tax-Deferred IRA owner who uses the Uniform Lifetime Table to calculate her RMD under the existing regulations must use a life expectancy of 27.4 years. Using the updated tables in the proposed regulations, the account owner would use 29.1 years to calculate her RMD. For an IRA valued at $1 million, the first year RMD would decrease by only $2,132. That’s not much difference when you realize that life expectancy for those 65 years or older has increased by approximately 8% since the last update to the tables in 2002. But, at least our retirement money will last a little longer because of the change.

The life expectancy tables under the proposed regulations would apply for distribution calendar years beginning on or after Jan. 1, 2021.

For example, for an individual who attains age 70 1⁄2 during 2020 (so that the minimum required distribution for the distribution calendar year 2020 is due April 1, 2021), the final regulations would not apply to the minimum required distribution for the individual’s 2020 distribution calendar year, but would apply to the minimum required distribution for the individual’s 2021 distribution calendar year (which is due Dec. 31, 2021).