What You Need to Know
- The tables haven't been updated in 20 years.
- The life expectancy at age zero is now 84.6 years, up from 82.4 years.
- The updated tables don't account for a recent decline in life expectancy due to the pandemic and other factors.
Required minimum distributions will be smaller starting in 2022 as updated Internal Revenue Service life expectancy tables go into effect.
“It’s been 20 years since the IRS last updated these tables,” writes Natalie Choate, an attorney in Wellesley, Massachusetts, “so some advisors may have forgotten that such a change was even possible.”
The new tables can be found at the end of IRS Bulletin 2020-49, published in November 2020, according to Choate, who explained the changes in a recent Morningstar column, “New Year, New IRS Life Expectancy Tables.”
As Choate writes, the life expectancy has increased in these tables. For example, the new table has a life expectancy at age zero of 84.6 years, versus 82.4 years in the old table. This means that RMDs are slightly lower since IRA withdrawals are expected to be spread out over a longer lifetime.
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As Sarah Brenner, director of retirement education at Ed Slott & Co., states in the company’s newsletter: “The new tables can be used by anyone who is taking RMDs, even those who inherited an account a long time ago or those way beyond their RMD required beginning date. One exception is for those who reached 72 in 2021 and decided to delay their first RMD into 2022 (before April 1, 2022). Those individuals need to use the old tables to calculate that delayed 2021 RMD even though they can take it in 2022.”