Status of new RMD tables?

[audreyh1]

Thanks for the update!

 

[Midpack]

Example:

The life expectancy tables and applicable distribution period tables in the regulations generally reflect longer life expectancies than the formerly applicable tables. For example, a 72-year-old IRA owner who applied the former Uniform Lifetime Table to calculate RMDs used a life expectancy of 25.6 years. Applying the Uniform Lifetime Table set forth in the new regulations, a 72-year-old IRA owner will use a life expectancy of 27.4 years to calculate RMDs.

The effect of these changes is to reduce RMDs generally, which will allow participants to retain larger amounts in their retirement plans to account for the possibility they may live longer, the IRS says.

 

[Time2]

As far as I looked the withdrawal percentages are the same, just that you have an additional 1-1/2 years before you have to start. That does make sense.
Hopefully Secure Act 2.0 will pass and push it to 75. Yippee, 4.5 more years to do Roth Conversions.

 

[SecondCor521]

As far as I looked the withdrawal percentages are the same, just that you have an additional 1-1/2 years before you have to start

The new RMD tables have higher divisors than the current RMD tables. For my Dad (84), there is an 8.1% reduction in the amount he has to take (in 2022).

Yes, the SECURE Act pushed required beginning date to age 72. Two different things.

 

[audreyh1]

As far as I looked the withdrawal percentages are the same, just that you have an additional 1-1/2 years before you have to start. That does make sense.
Hopefully Secure Act 2.0 will pass and push it to 75. Yippee, 4.5 more years to do Roth Conversions.

No, the withdrawal percentages for each age group are slightly lower with the new tables.

They now expect people to live a bit longer, so they let you take out a bit less each year.

 

[Time2]

No, the withdrawal percentages for each age group are slightly lower with the new tables.

They now expect people to live a bit longer, so they let you take out a bit less each year.

Yep, you all are right, I looked at the first two years and saw they had the same distribution period 27.4 years and 26.5 years. The 3rd your decreases from 25.6 to 25.5 years. By 85 yrs old the difference is 1.2 years. By 100 yrs old, the difference is back to 0.1 year.



OLD TABLE- https://www.required-minimum-distribution.com/rmd-table/


NEW TABLE- https://www.currentfederaltaxdevelo...or-computing-rmds-effective-beginning-in-2022

 

[LRDave]

Bringing this back to the top - my understanding is that 2021 RMDs will be calculated with the old tables and 2022 will be the first year for RMDs with the new tables - correct?

Any new thoughts, given this late-year relief act, as to whether RMDs could get suspended again? I suspect not, but just MHO.

 

[Koolau]

Bringing this back to the top - my understanding is that 2021 RMDs will be calculated with the old tables and 2022 will be the first year for RMDs with the new tables - correct?

Any new thoughts, given this late-year relief act, as to whether RMDs could get suspended again? I suspect not, but just MHO.

Heh, heh, my SWAG is that Uncle needs the money, so probably no RMD "holiday" in 2021. Haven't even heard a holiday mentioned in conjunction with the new relief act, but YMMV.

 

[cathy63]

Bringing this back to the top - my understanding is that 2021 RMDs will be calculated with the old tables and 2022 will be the first year for RMDs with the new tables - correct?

Any new thoughts, given this late-year relief act, as to whether RMDs could get suspended again? I suspect not, but just MHO.

Yes, that's correct on the timing for the new RMD tables.

A 2021 RMD holiday would require new legislation. The package that was just passed does not include one.

 

[Car-Guy]

All those years (in the 70's/80's/90's+) I put money in tax deferred accounts (IRA's/401k's) with the understanding that when I retired and started to take it out, I should be in a lower tax bracket and thereby paying less tax.... Sounded good until they "effectively" changed the rules again (~2003 I think) and are hitting me with IRMMA premiums now in large part because of my RMD's... They are going to get as much as they can, one way or another!

Actually, I wouldn't mind so much paying 2 or 3 times more if I got better service.... Forget that!

I was actually a little surprised when they bumped the RMD's from 70 1/2 to 72... Still waiting to find out how that screws us.

 

[Sunset]

...
I was actually a little surprised when they bumped the RMD's from 70 1/2 to 72... Still waiting to find out how that screws us.

One way is people who are 70.5 and now delay all withdrawals (conversions) until 72, will allow their accounts to grow, and possibly push them into a higher bracket earlier at some point along the RMD path.

 

[USGrant1962]

One way is people who are 70.5 and now delay all withdrawals (conversions) until 72, will allow their accounts to grow, and possibly push them into a higher bracket earlier at some point along the RMD path.

That's screwing themselves - nothing prevents one from taking withdrawals at 70 and 71 as previously scheduled.

To be honest, while pushing RMDs to 72 is nice - it is nuts to think it has something to do with Covid stimulus. It keeps potential cashflow out of the economy and locked up in retirement accounts - exactly the opposite of stimulus.

 

[Dtail]

One way is people who are 70.5 and now delay all withdrawals (conversions) until 72, will allow their accounts to grow, and possibly push them into a higher bracket earlier at some point along the RMD path.

Definitely a first world problem...

 

[unclemick]

Heh, heh, my SWAG is that Uncle needs the money, so probably no RMD "holiday" in 2021. Haven't even heard a holiday mentioned in conjunction with the new relief act, but YMMV.

Yep. And after 15 years up North I'm switching from the Saint's to Chiefs. With a few good stocks of course.

Heh heh heh - Still have warm spot for the Saint's though. Don't want to disappoint my Pals at the IRS.

 

[Koolau]

Definitely a first world problem...

I've been thinking the same thing about several financial issues brought to light in our Forum lately:

Did I "over save"

What about RMD's and the various "cliffs"

What to do with all that stimulus money the gummint is sending us?

Ways to avoid (esp. OB care) "cliffs" in general

Dare I say it (I've certainly thought about it)? What if one of us dies? Taxes will kill the one left behind.

I don't have any "tax losses" to harvest this year!

I'm sure there are others I've forgotten as YMMV.

I can picture folks in the 2nd and 3rd world laughing at us for our various financial concerns.

 

[meierlde]

What triggers congress to do a suspension of rmds is a very siginificant fall in in the market in the first 4 months or so of the year so the rmd would be more than that if calculated at the present value. I could see the next time congress moving to saying you can use the value at 12/31 or 6/30 to calculate the rmd. Sort of like is done with estate taxes.