Are You Receiving Required Minimum Distributions (RMD) from Your IRA?

Market Perspectives November 2020
November 12, 2020
Market Perspectives December 2020
December 9, 2020

By: Lyric Martin, CFP

On November 6, 2020, the IRS issued new Tables for IRA distributions in 2022.

Some good news in 2020 – the IRS recognizes that Life Expectancy has increased; the result – your annual REQUIRED distribution will decrease starting in 2022.  Remember, you can always take more than the required distribution if you need cash flow for living expenses, etc., or if you want to make Qualified Charitable Distributions (QCD) using IRA funds.  If you want to know more about making charitable gifts via QCD, please contact your financial planner or investment consultant.

In case you are interested in the back story, the current life expectancy tables have been in effect since 2002.  An Executive Order issued in 2018 directed the IRS to review life expectancy.  This will allow you to retain more funds in your IRA to grow tax-deferred and support you throughout your lifetime.  An example: if you turn 72 on January 1, 2022, are married and your spouse is the beneficiary of your IRA, and you have $1.0 million in your IRA, the RMD will now be $36,496.  Under the old Tables it would have been $39,063; a 7% decrease.  The new Tables assume that a 72-year-old will live to age 99.4!

Just a reminder – if you are not currently receiving distributions from your IRA, you will be required to do so in the year you reach age 72.5.

Lyric Martin, CFP is a Financial Planner at Carolinas Investment Consulting.

Carolinas Investment Consulting is not affiliated with any of the websites linked in this commentary. Nothing contained herein constitutes financial, legal, tax, or other advice. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Carolinas Investment Consulting. The information published herein is provided for informational purposes only, and does not constitute an offer, solicitation or recommendation to sell or an offer to buy securities, investment products or investment advisory services. All information, views, opinions and estimates are subject to change or correction without notice. The appropriateness of an investment or strategy will depend on an investor’s circumstances and objectives. These opinions may not fit to your financial status, risk and return preferences. Past performance is not indicative of future returns.

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