Last fall, the Trump Administration issued an executive order that directed the Treasury Department to review the rules for required minimum distributions from qualified retirement plans. Retirement Report readers have been anxiously awaiting news since then. Finally, more than a year later, there is a new development to report: The IRS has issued new proposed life expectancy tables to calculate RMDs.
The new tables take into account longer life expectancies. The current tables stop at age 115+, but the new ones run an extra five years, to 120+. These are the first changes made to the tables since 2002.
What do the new tables mean in practice? When calculating RMDs under the proposed rules, the life expectancy factors would be higher, which means an account owner would take out a smaller amount, leaving more money to grow tax-deferred in the retirement account. For instance, the current factor for someone who is age 71 is 26.5, whereas the proposed rules would set that factor at 28.2. That change means a 71-year-old with a $1 million IRA would be required to take out nearly $2,300 less.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The new tables are not a done deal just yet. The proposed regulations must still go through a few more regulatory steps before they can be finalized. If they stay on track through that process, the new rules would be used to calculate 2021 RMDs. Proceed as usual with the current rules for 2019 and 2020 RMDs.
If you want to share your thoughts about these proposed RMD changes, you can submit a comment until January 7, 2020. To do so, and to learn more about the changes, go to federalregister.gov (opens in new tab) and search for document number 2019-24065 (opens in new tab).
The public hearing is scheduled for January 23, 2020.
-
-
Fed Raises Interest Rates Yet Again: What the Experts Are Saying
Federal Reserve The Fed's quarter-point rate hike was welcomed by the market and market pros, alike.
-
Stock Market Today: Stocks Swing Higher After Powell Presser
The Fed raised rates by 0.25%, as expected, and Powell promised to "stay the course until the job is done."
-
Stock Market Holidays in 2023: NYSE, NASDAQ and Wall Street Holidays
Markets When are the stock market holidays? Take a look at which days the NYSE, Nasdaq and bond markets are off in 2023.
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?
Markets When does the market open? While it's true the stock market does have regular hours, trading doesn't stop when the major exchanges close.
-
Bogleheads Stay the Course
Bears and market volatility don’t scare these die-hard Vanguard investors.
-
I-Bond Rate Is 6.89% for Next Six Months
Investing for Income If you missed out on the opportunity to buy I-bonds at their recent high, don’t despair. The new rate is still good, and even has a little sweetener built in.
-
What Are I-Bonds?
savings bonds Inflation has made Series I savings bonds enormously popular with risk-averse investors. How do they work?
-
This New Sustainable ETF’s Pitch? Give Back Profits.
investing Newday’s ETF partners with UNICEF and other groups.
-
As the Market Falls, New Retirees Need a Plan
retirement If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.
-
Retirees: Your Next Companion May Be a Robot
happy retirement Robots may help fill the gap left by a shortage of humans to help older adults live independently.
