IRS Issues New Life Expectancy Tables

 

GOOD NEWS! Starting in 2022 IRA and retirement plans required minimum distributions (RMD) will be somewhat smaller. Why might you ask? Because the population’s life expectancy is getting longer, the IRS released new life expectancy tables that will be used starting with the 2022 RMDs.

The majority of the time the Uniform Lifetime Table is used to calculate an RMD but depending on the circumstances there are two other tables that can be used as well (Single Life Table and Joint and Last Survivor Table) and these tables have also been updated.

The Single Life Table is used to calculate RMDs for inherited IRAs, but only if they are an “eligible designated beneficiary.” Eligible designated beneficiaries include: a surviving spouse; a minor child; a chronically ill individual; disabled individual; or someone no more than 10 years younger than the account holder. All other individual beneficiaries who received an inherited IRA after 2019 are subject to a 10-year payout rule.

The Joint and Last Survivor Table is used to calculate RMDs for IRA owners that have a spouse beneficiary that is 10 or more years younger.

A smaller RMD means less taxes and more retirement savings you can retain for tax-deferred growth. Taking more than the RMD is always allowed, however, if the RMD is not taken, a 50% penalty could be handed down from the IRS. FMPWA would appreciate the opportunity to serve you, and we hope this information helps you understand the upcoming changes to your Required Minimum Distributions.

Eva Kreps
Retirement Plan Advisor

First Merchants Private Wealth Advisors products are not FDIC insured, are not deposits of First Merchants Bank, are not guaranteed by any federal government agency, and may lose value. Investments are not guaranteed by First Merchants Bank and are not insured by any government agency. This material has been prepared solely for informational purposes. First Merchants shall not be liable for any errors or delays in the data or information, or for any actions taken in reliance thereon. Any views or opinions in this message are solely those of the author and do not necessarily represent those of the organization.