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.
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