Status of new RMD tables?

[SecondCor521]

I know that the IRS has proposed new tables to be used to calculate RMDs. All the articles I can find talk about the new tables, what their effect is, and what the new table values are.

What I would like to know, but cannot seem to find with my google-fu, is whether these new tables have been formally adopted or not. The comment period and public hearing were supposedly back in the early part of this year, but I have seen no followup.

I went ahead and updated my RMD projections spreadsheet, since I'm scheduled to start RMDs in 2041, so I think they'll take effect by then

Anyone know for sure whether they're really in effect or not?

 

[njhowie]

Anyone know for sure whether they're really in effect or not?

Schwab and the other brokers provide RMD calculators which should be updated if/when it takes effect. If you go to Schwab's site they indicate updates coming:

https://www.schwab.com/ira/understand-iras/ira-calculators/rmd

We have Fidelity automatically do mom's RMD annually and I'm sure if/when the time comes, they'll implement it and adjust the amount withdrawn.

 

[OldShooter]

I haven't been paying attention. What sort of changes are being proposed?

 

[audreyh1]

I think they are simply updated to a longer lifespan so percentages drop slightly for RMDs.

The new life expectancy tables will result in the first RMD for an owner age 72 dropping from 3.91% to 3.67%.

Table showing RMD for a range of life expectancy

From https://rodgers-associates.com/blog...expectancy-tables-for-rmds-make-a-difference/

 

[audreyh1]

Schwab and the other brokers provide RMD calculators which should be updated if/when it takes effect. If you go to Schwab's site they indicate updates coming:

https://www.schwab.com/ira/understand-iras/ira-calculators/rmd

We have Fidelity automatically do mom's RMD annually and I'm sure if/when the time comes, they'll implement it and adjust the amount withdrawn.

Looks like the changes coming to the Schwab calculator are due to the new 72 starting age.

 

[kaneohe]

Sounds like some new table was adopted although it is not clear if there were any changes to the proposed table.
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

https://rodgers-associates.com/blog...expectancy-tables-for-rmds-make-a-difference/

The changes will be in effect for 2021 so plenty of time to figure things out.

 

[SecondCor521]

Thanks everyone.

I guess what I was hoping for is an IRS announcement saying, "Hey, we had our hearings and nobody complained, so we adopted the proposed tables and they're now in effect." Or articles saying "Hey, those RMD tables that the IRS proposed? Yeah, they're now for reals." I haven't really seen those - just "These tables are probably going to be used starting in 2021." sorts of articles.

I'm not sure I understand the statement on the Schwab website about the SECURE Act and RMDs, since really all that changed, as far as I'm aware, was the required beginning date. Which really shouldn't change the calculator at all - put in your age, your balance, and the results should be the same pre-SECURE vs. now. But there may be other RMD-related SECURE Act changes that don't apply to me so I've ignored them.

Anyway, thanks everyone for the replies.

 

[Midpack]

Thanks everyone.

I guess what I was hoping for is an IRS announcement saying, "Hey, we had our hearings and nobody complained, so we adopted the proposed tables and they're now in effect." Or articles saying "Hey, those RMD tables that the IRS proposed? Yeah, they're now for reals." I haven't really seen those - just "These tables are probably going to be used starting in 2021." sorts of articles.

I'm not sure I understand the statement on the Schwab website about the SECURE Act and RMDs, since really all that changed, as far as I'm aware, was the required beginning date. Which really shouldn't change the calculator at all - put in your age, your balance, and the results should be the same pre-SECURE vs. now. But there may be other RMD-related SECURE Act changes that don't apply to me so I've ignored them.

Anyway, thanks everyone for the replies.

I think you're right. We've all seen the proposed tables, and the comment period, etc. is over - but there hasn't been an actual approval acknowledgement yet. All the IRS documentation still shows the pre-SECURE act Life Expectancy AND Uniform Lifetime tables. I am sure the IRS (and all the brokers) will announce approval and update the tables when they're official, well before Jan 2021.

It's still a proposal in the FR as far as I can tell https://www.federalregister.gov/doc...bles-used-for-purposes-of-determining-minimum

 

[SecondCor521]

For the heck of it, I called the federal government and left a message asking them this question. I will post an update to this thread with their reply.

 

[Dtail]

For the heck of it, I called the federal government and left a message asking them this question. I will post an update to this thread with their reply.

Hopefully you will get the reply before you turn 70.

 

[ERD50]

Sounds like some new table was adopted although it is not clear if there were any changes to the proposed table.
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

https://rodgers-associates.com/blog...expectancy-tables-for-rmds-make-a-difference/

The changes will be in effect for 2021 so plenty of time to figure things out.

Yes, I saw this thread and wondered, but RMDs were suspended for 2020, right? DW has a small inherited IRA, so we need to keep on top of that (but Fidelity, and most others I think, provide the info, so it's easy). I probably still will pull some, I hope to get it to zero before my age 72, it fits in with Roth conversion strategy, and just to simplify - one less account for us/heirs to deal with. And if it looks like I need to have more Fed/State withholding, I can do it from the IRA withdrawal, and it counts as being spread across the whole year, which I like better than doing quarterly estimates.

-ERD50

 

[audreyh1]

It’s not clear yet whether the RMD table will be updated for 2021.

The article quoted and linked above said “most likely”

On November 7, 2019, nearly 15 months after the Executive Order was issued, the Internal Revenue Service (IRS) released proposed updated life expectancy and distribution period tables. The proposal must go through the formal approval process and will most likely take effect in 2021. The proposal includes updates to the factors used to calculate RMDs in each of three different life expectancy tables:

Maybe we’ll hear something by December.

 

[Koolau]

I know that the IRS has proposed new tables to be used to calculate RMDs. All the articles I can find talk about the new tables, what their effect is, and what the new table values are.

What I would like to know, but cannot seem to find with my google-fu, is whether these new tables have been formally adopted or not. The comment period and public hearing were supposedly back in the early part of this year, but I have seen no followup.

I went ahead and updated my RMD projections spreadsheet, since I'm scheduled to start RMDs in 2041, so I think they'll take effect by then

Anyone know for sure whether they're really in effect or not?

Not at all being critical but with 2041 as your projected date for first RMD I would expect MORE changes in RMDs (maybe different tables and maybe different age requirements.) I'm only suggesting that the minor proposed changes for this (or next) year may be eclipsed by future changes. Not that you shouldn't prepare, but I guess I (emphasis on "I") wouldn't over plan based on events of 2021. Just a thought as YMMV.

 

[SecondCor521]

Not at all being critical but with 2041 as your projected date for first RMD I would expect MORE changes in RMDs (maybe different tables and maybe different age requirements.) I'm only suggesting that the minor proposed changes for this (or next) year may be eclipsed by future changes. Not that you shouldn't prepare, but I guess I (emphasis on "I") wouldn't over plan based on events of 2021. Just a thought as YMMV.

Yeah, I get your point.

I was sort of poking fun at myself with that comment, because it's pretty much worthless to do detailed planning ~21 years in advance since, as you note, things will almost certainly change between now and then.

On the other hand, this kind of thing keeps me off the streets at night, is mildly entertaining, and does give me at least a little bit of guidance today in terms of how much I want my Roth conversions to be for now.

 

[kaneohe]

by Alan S. » Sat Oct 10, 2020 2:11 pm (from BH)

The IRS has still not officially approved the new RMD tables proposed a year ago to start in 2021. While approval was widely expected, the longer this takes the greater the possibility of an approval made after Thanksgiving, in which case some custodians including VG may not have their systems updated by 1/1.

 

[SecondCor521]

by Alan S. » Sat Oct 10, 2020 2:11 pm (from BH)

The IRS has still not officially approved the new RMD tables proposed a year ago to start in 2021. While approval was widely expected, the longer this takes the greater the possibility of an approval made after Thanksgiving, in which case some custodians including VG may not have their systems updated by 1/1.

Thanks for the followup.

It just occurred to me that this will affect my Dad, who is set up for auto-RMDs with VG on a monthly basis (1/12th of his RMD amount on the 15th of every month).

I suppose if there is a timing issue Vanguard will work it out. Or my Dad will end up taking out ~8% more than his (newly lowered) RMD, which is also not the end of the world.

 

[meierlde]

I just checked the irs site and it still shows the old factors: https://www.irs.gov/publications/p590b#en_US_2019_publink1000231258

 

[OldShooter]

I'm not sure I understand the concern about 1/1 here unless someone wants to take their whole RMD right away. We just draw as we need money and monitor where we are with the RMD number to make sure we're compliant by year end. No urgency at all to know an exact number.

 

[Koolau]

I'm not sure I understand the concern about 1/1 here unless someone wants to take their whole RMD right away. We just draw as we need money and monitor where we are with the RMD number to make sure we're compliant by year end. No urgency at all to know an exact number.

OldShooter, your approach sounds very wise and efficient. Heh, heh, also sounds like w*rk! I just pull once a year, usually within the first quarter. I stick it all in the checking account and use out of that for the rest of the year. Absolutely, that means I leave (potential) gains behind. Since I can live without the gains and (realistically, without taking significant investment risk) it ain't that much. That way, I never have to REMEMBER to be SURE I've taken out enough to avoid the draconian penalties either. Your way is much more elegant. I'm okay with mine even though YMMV.

 

[OldShooter]

OldShooter, your approach sounds very wise and efficient. Heh, heh, also sounds like w*rk! ...

Thanks for the flowers, but I am a very lazy person. Every time I go to my Schwab IRA account to withdraw money, they tell me how much I have withdrawn YTD and remind me of my RMD. It's on the same page as the withdrawal form. So it's really zero effort to monitor. I'll just have to remember that early 2021 the Schwab number may not be dead nuts precise.

Re pulling early in the year, any time we sell it is a market timing decision. I don't leave my money in the IRA because I'm necessarily trying to capture the year's growth. I just never know where the market is going, so dribbling it out is kind of a reverse DCA. If I wanted to avoid market effects I could just sell any necessary equities on January 2nd and leave the money in the account to earn the current pittance.

 

[Koolau]

Thanks for the flowers, but I am a very lazy person. Every time I go to my Schwab IRA account to withdraw money, they tell me how much I have withdrawn YTD and remind me of my RMD. It's on the same page as the withdrawal form. So it's really zero effort to monitor. I'll just have to remember that early 2021 the Schwab number may not be dead nuts precise.

Re pulling early in the year, any time we sell it is a market timing decision. I don't leave my money in the IRA because I'm necessarily trying to capture the year's growth. I just never know where the market is going, so dribbling it out is kind of a reverse DCA. If I wanted to avoid market effects I could just sell any necessary equities on January 2nd and leave the money in the account to earn the current pittance.

I'll have to admit: I have NO idea what my 401(k) manager would do if I did a partial RMD withdrawal - or no RMD withdrawal at all! For all I know, they'd let me take the unreal 50% penalty 'cause they never reminded me! I probably should ask them. Naaaaaahhh! Too much effort - did I mention I don't w*rk anymore.

I've mentioned before that, at least, I only have ONE thing to remember - my 401(k). I converted all (my and DW's) tIRAs to Roths prior to RMDs. For ME, that was as elegant as I get. Thanks for your thoughts because My Mileage May Vary!

 

[SecondCor521]

I'm not sure I understand the concern about 1/1 here unless someone wants to take their whole RMD right away. We just draw as we need money and monitor where we are with the RMD number to make sure we're compliant by year end. No urgency at all to know an exact number.

I'll explain the concern.

Before doing so, let me point out that my concerns are over something that is not a big deal, so people are feel to consider me to be obsessing over nits or whatever other phrase they would like to use.

As mentioned above, my father has his traditional IRA at Vanguard. He is 85 and therefore is subject to RMD rules. Being 85 and of lessened mental acuity, he has set up an automatic RMD, which is a service Vanguard offers to their clients. He has chosen to set it up so that the sale of assets within the IRA, the federal income tax withholding, and the transfer to his taxable account all takes place automatically. He has further chosen to do these withdrawals monthly on the 15th of the month.

So Vanguard automatically looks at his age and 12/31 IRA balance, calculates his RMD based on the RMD table, and then takes 1/12th of that amount every month.

This benefits my Dad because he doesn't have to worry about his RMD (he sometimes does anyway as he is a bit forgetful), minimizes his taxable income, and gives him an even and regular cash flow.

If the new tables are not approved in time, Vanguard will presumably use the existing RMD table, make the RMD calculation, divide by 12, and do a transaction on 1/15/21 with that number.

If the new tables subsequently are approved for 2021 use, then my Dad's 1/15/21 withdrawal will be about 8.1% too much. Depending on when in the year Vanguard is able to switch over to the new table, my Dad's 2/15/21 withdrawal may be too much by 8.1% as well. Ditto for March, April, May, etc.

It is unclear what Vanguard will do or should do in this case. Switch to the new, 8.1% lower amount part of the way through the year? Keep taking out 8.1% too much? Let my Dad decide? Take out proportionally less for subsequent months so that only his RMD is taken out?

Whatever happens, it is likely to make it harder for my Dad to achieve his goals of simplicity, tax minimization, RMD compliance, and regular even income in 2021.

Again, totally not a big deal, and I'm sure Vanguard and my Dad will make good choices and we'll make it work, but those are the concerns I have.

 

[Souschef]

I have my RMD's scheduled throughout the year. January, April, June and September to pay my estimated taxes. Then June, July, August and September for our son's birthdays.
I also have a couple of QCD's scheduled. I am an Excel nut, so it is all in a spreadsheet I update yearly.
YMMV

 

[RobbieB]

I'm ahead of the game. I'm taking before they're required.

 

[SecondCor521]

Well, I needen't have worried, which is of course usually the case (me worrying and not needing to). I really should learn.

The IRS has approved the new tables but they're in effect starting in 2022, per this post and link from the very helpful @cathy63:

https://www.early-retirement.org/forums/f28/secure-act-2-0-a-106488.html#post2513581