RMD Life Expectancy Update

[USGrant1962]

The IRS has officially proposed the next update to the life expectancy tables used to calculate RMDs. The last update was 2002. It won't make a huge difference, ~$2,100 lower RMD per million, but helps.

Kitces discusses here: https://www.kitces.com/blog/irs-proposes-new-rmd-life-expectancy-tables-to-begin-in-2021/

 

[badatmath]

Um, see user name right?

Is this in English?

In the case of beneficiaries of inherited retirement accounts looking to stretch, the transition process is a bit more confusing, as such beneficiaries cannot simply use the new life expectancy tables going forward at their current age. Instead, they must retroactively determine what their ‘original’ stretch period would have been in the past under the new tables, and then adjust forward to where that distribution schedule would be today (by subtracting 1 for each subsequent year since the year after the original account owner’s death).


If I am a non spouse inheritor does that mean I am 50 in 2021 and then i pretend I am 49 or what?

 

[audreyh1]

The meat of it is here - old versus new RMD percentages for each age
https://www.kitces.com/wp-content/u...time-Table-RMD-Percentage-Of-Acct-Balance.pdf

 

[Theo]

Um, see user name right?

Is this in English?

In the case of beneficiaries of inherited retirement accounts looking to stretch, the transition process is a bit more confusing, as such beneficiaries cannot simply use the new life expectancy tables going forward at their current age. Instead, they must retroactively determine what their ‘original’ stretch period would have been in the past under the new tables, and then adjust forward to where that distribution schedule would be today (by subtracting 1 for each subsequent year since the year after the original account owner’s death).


If I am a non spouse inheritor does that mean I am 50 in 2021 and then i pretend I am 49 or what?

It means if your life expectancy was 34 when you inherited 3 years ago. This year under the current tables, you would divide the 12/31 value by 31 to get your rmd. If the new tables say you life expectancy 3 years ago was 34.4, now you would divide by 31.4 instead of 31.

 

[badatmath]

Thanks.

 

[corn18]

Thanks for the table! Used it to update my RMD plan.

 

[Alexi]

Is this a done deal yet? If not who makes the final decision ?

 

[audreyh1]

Sounded like it might take a year to go through, maybe longer. So don’t change your calculations yet!

Central to the proposal (which must still go through the formal approval process and thus might not “go live” until sometime next year, though the proposed changes wouldn’t take effect until 2021 anyway)

 

[The Cosmic Avenger]

Interesting...I know this board is not representative of the general population, but it seems many people here are taking just the RMD. However, Kitces says:

[A]ccording to data provided by the IRS, of the Americans who are required to take distributions from retirement accounts, only roughly 20% are taking no more than the minimum required. Which means that the remaining 80% are taking more than the required minimum, thus making any decreases in RMDs a moot point.

Hmm...time for a poll!

 

[The Cosmic Avenger]

I made a poll: How many ER readers are taking more than the RMD?

 

[steelyman]

Hmm...time for a poll!

Should be interesting, thanks for posting. I’m not subject to RMDs on my personal accounts but I am on an inherited IRA so I voted on that basis.