With many other things going on in November, it was easy to miss when the IRS issued new life expectancy tables. This is important because these tables are used to calculate Required Minimum Distributions (RMDs) from IRAs and qualified retirement plans.
The old tables will still be used when determining 2021 RMDs, but as of January 1, 2022, the new tables become effective.
This change has been long overdue. The current life expectancy tables were last updated in 2002. The new tables better reflect the improved life expectancy of individuals. These changes will generally reduce the amounts required to satisfy RMDs, meaning account owners can retain a larger amount in their retirement accounts and defer taxes longer. Coupled with the fact that the RMD age was lifted to 72 in 2020 and no RMDs were required in 2020, there is potential to keep more money sheltered in tax-advantaged accounts.