The IRS has issued proposed regulations updating the life expectancy tables that apply for purposes of computing required minimum distributions (RMDs) from qualified retirement plans. The proposed rules under Code Section 401(a)(9) were published in today’s Federal Register.
The life expectancy tables and the Uniform Lifetime Table under the proposed regulations were developed based on mortality rates for 2021, the IRS notes, and would apply for distribution calendar years beginning on or after Jan. 1, 2021. The introduction to the proposed rules explains that they reflect longer life expectancies than the tables in the current regulations, and provide two illustrative examples:
- A 70-year old IRA owner who uses the Uniform Lifetime Table to calculate required minimum distributions must use a life expectancy of 27.4 years under the existing regulations. Using the Uniform Lifetime Table set forth in the proposed regulations, this IRA owner would use a life expectancy of 29.1 years to calculate required minimum distributions.
- Under the existing regulations, a 75-year old surviving spouse who is the employee's sole beneficiary and uses the Single Life Table to compute required minimum distributions must use a life expectancy of 13.4 years. Under the proposed regulations, the spouse would use a life expectancy of 14.8 years.
“The effect of these changes is to reduce required minimum distributions, which will allow participants to retain larger amounts in their retirement plans to account for the possibility they may live longer,” the IRS explains.
Public comments on the proposed regulations will be accepted for 60 days, or until Jan. 8, 2020; the IRS plans to hold a public hearing on the proposed regulations on Jan. 23, 2020.
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