Proposed RMD Rules Would Trim Mandated Distributions for Retirees

Ways to get your voice heard on possible new life expectancy tables that would affect your money.

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.

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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 (opens in new tab) and search for document number 2019-24065 (opens in new tab).

The public hearing is scheduled for January 23, 2020.

Rachel L. Sheedy
Editor, Kiplinger's Retirement Report