RMD (or MRD) tables

Investing Strategies Retirement Investing
1

I am trying to calculate the Required Minimum Distributions for DH and myself for this year into the future. In addition to our separate retirement accounts, I have an inherited IRA (from my mother).

DH will be 70 at the end of 2022. I will be 69 at the end of 2022.

**Required minimum distributions [of an IRA] during your lifetime are based on a distribution period that is generally determined using Table III (Uniform Lifetime) in Appendix B.**

I am confused because there are different tables with different life expectancies.

This is the table used by the IRS calculator. That is itself confusing because it uses the factor of 27.4 for age 72.
https://www.investor.gov/financial-tools-calculators/calcula…

IRA Required Minimum Distribution Worksheet, Table III Uniform Lifetime (this is a pdf so I can’t post the link)
`


Age     Distribution Period
70      27.4 
71      26.5 
72      25.6 
73      24.7 
74      23.8

`

**However, this is different than the factors used in Table 1 (Single Life Expectancy) for beneficiaries, which is used to calculate the RMDs from my inherited IRA.**

`


68 	18.6 	
69 	17.8 	
70 	17.0
71 	16.3 	
72 	15.5 	
73 	14.8 	
74 	14.1 	
75 	13.4

`

**Is it correct that I should use Table I for the inherited IRA and Table III for the RMD from retirement accounts? Why are the life expectancies so different?**

**Wendy**

2

I just use an online RMD calculator. Since mine are further out, I first added up the balances of the TIRAs and Traditional 401K, put that through a savings calculator at an assumed annual rate of return for the number of years until RMDs coming due, then taking that extrapolated number to the RMD calculator, I plugged the numbers in. The one I used the first time was able to give me a table of RMDs going forward at a rate I assigned to it. This was fascinating because it showed how quickly those RMDs ramp up over the years. Even though I’ve been taking RMDs from my inherited IRA as required, the balance continues to go up, and as I age I have to take a larger portion, so the RMDs escalate. It was an eye opener in deciding to do Roth conversions. Your first RMD is likely to be your smallest, absent a huge correction or poor investment.

I don’t remember which one I used, though almost all brokerages have them available to anyone as do the financial mags like Forbes. I started a couple of them and went away when they wanted me to register. I remember having to do it differently for my inherited IRA than projecting the rmds for my TIRA. Lots to be found on Google.

IP

3

For all years prior to last year, your financial institution likely would have calculated the RMD for the bene IRA for you. Is there a reason why you are having to do it yourself?

As far as which table to use (Single or Uniform), I think you always use Table 1 for benes:

https://www.irs.gov/retirement-plans/required-minimum-distri…

4

I just use an online RMD calculator.

You need to be careful with online RMD calculators right now. The one that my brokerage provided produced the wrong results. I tried several other online calculators with the same results. The only online calculator that provided the correct RMD calculation was one on the AARP web site.

The basic problem with most of the online calculators was they hadn’t been update for the Universal Lifetime factors that came into effect on 01 January 2021.

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5

For all years prior to last year, your financial institution likely would have calculated the RMD for the bene IRA for you. Is there a reason why you are having to do it yourself?

The IRS holds you responsible for any errors in calculating your RMD. For the first time, my financial institution made an error in the calculation this year. I had to get them to correct their error so that they would report the correct distribution on my 2022 1099-R.

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6

Oops my bad! The new Universal Lifetime factors came into effect on 01 January 2022 not 2021 as stated in my previous post.

7

Is it correct that I should use Table I for the inherited IRA and Table III for the RMD from retirement accounts?

Kind of.

Table I gives you the starting point for inherited IRAs. However, after the starting point, you are no longer supposed to use the numbers in the table - you are supposed to adjust the numbers in the table based on how many years it has been since the owner died. From IRS Pub 590-B:

Other designated beneficiary. Use the life expectancy listed in the table next to the beneficiary’s age as of his or her birthday in the year following the year of the owner’s death. Reduce the life expectancy by 1 for each year since the year following the owner’s death.

Since you and your spouse are close in age, you will use Table III for your RMDs. (If one of you were 10 years younger than the other AND the younger spouse was the sole beneficiary of the older spouse’s IRA, the older spouse would use Table II.)

Why are the life expectancies so different?

The tables are so different because the beneficiary table (Table I) is factoring in the original owner’s age, in addition to using the age of the beneficiary. So even though inherited IRAs were touted as being disbursed “over the lifetime of the beneficiary” - they weren’t really. If the beneficiary lives long enough, at some point, by adjusting the life expectancy correctly, they will get to a life expectancy of less than 1 year and will have to withdraw the entire balance.

I will also point out that if you are using these tables for future planning, you probably need to use the tables in the draft version of Pub 590-B https://www.irs.gov/pub/irs-dft/p590b–dft.pdf as the tables were updated significantly beginning with 2022 RMDs. This update was originally supposed to take place beginning with 2021 RMDs, but was delayed.

AJ

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8

I would think this might be the best on-line RMD calculator to use:

https://www.investor.gov/financial-tools-calculators/calcula…

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9

I just use an online RMD calculator.

For your 2022 (and beyond) RMDs, just be sure that the calculator is updated to the new tables. I believe that most of the ones provided by brokerages probably are, since brokerages had to be prepared to adjust the automatic RMD distributions. But since the IRS hasn’t officially published the new tables on their website (just in the Federal Register), I would be wary of calculators published by other entities.

AJ

10

The basic problem with most of the online calculators was they hadn’t been update for the Universal Lifetime factors that came into effect on 01 January 2021.

Those factors were delayed and only went into effect on Jan 1, 2022. From the 11/12/20 Federal Register https://www.federalregister.gov/documents/2020/11/12/2020-24… publishing the new rules:

A number of commenters also requested that the effective date of the final regulations be delayed to 2022 (instead of 2021). They noted that plan sponsors and IRA providers are currently working to update their systems for the SECURE Act changes to section 401(a)(9) and recommended that the effective date of these regulations be delayed in order to allow administrators sufficient additional time to update systems for these regulations. As described in the Effective/Applicability Date section of this preamble, these regulations will apply to distribution calendar years beginning on or after January 1, 2022.

AJ

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11

I just use an online RMD calculator.

You need to be careful with online RMD calculators right now. The one that my brokerage provided produced the wrong results. I tried several other online calculators with the same results. The only online calculator that provided the correct RMD calculation was one on the AARP web site.

The basic problem with most of the online calculators was they hadn’t been update for the Universal Lifetime factors that came into effect on 01 January 2021.

Why do people make this so complicated? If I had to take an RMD on 2022, I would take my total TIRA balance as of 12/31/21 and divide that number by my life expectancy based on my age. Where do I get that divisor? Just look it up in the table below.

$1,000,000 (TIRA Balance on Dec 31, 2021 DIVIDED BY 27.4 (if age 72 in 2022) = $36,496.35 RMD for 2022.

Easy Peasy. I realize there are different tables for inherited TIRA’s but for most of us, it seems pretty simple. Am I missing something?

https://www.irahelp.com/slottreport/new-2022-irs-life-expect…


Uniform Table			
			
To be used for 2022 and later-year RMDs			
			
Age of IRA Owner or
Plan Participant	Life Expectancy (in years)
72			27.4
73			26.5
74			25.5
75			24.6
76			23.7
77			22.9
78			22
79			21.1
80			20.2
81			19.4
82			18.5
83			17.7
84			16.8
85			16
86			15.2
87			14.4
88			13.7
89			12.9
90			12.2
12

Am I missing something?

What if you need to take an RMD in 2021 or earlier? You’d use a different table. And, yes, inherited IRAs use not only a different table, but a different calculation method after the first year. Not so easy peasy when you need to understand the details.

AJ

13

What if you need to take an RMD in 2021 or earlier? You’d use a different table. And, yes, inherited IRAs use not only a different table, but a different calculation method after the first year. Not so easy peasy when you need to understand the details.

AJ

I guess I am fortunate then to not having to worry about an Inherited TIRA.

Leave it to Uncle Sugar to make it so complicated mere mortals cannot cope.

14

For all years prior to last year, your financial institution likely would have calculated the RMD for the bene IRA for you. Is there a reason why you are having to do it yourself?

The OP was looking into the future. DH will be 70 at the end of 2022. I will be 69 at the end of 2022. The first RMD must be taken by April first of the year after one turns 72.

Except for the inherited IRA, which operates differently.

15

WendyBG-
<<I am trying to calculate the Required Minimum Distributions for DH and myself for this year into the future. In addition to our separate retirement accounts, I have an inherited IRA (from my mother).

DH will be 70 at the end of 2022. I will be 69 at the end of 2022.

Required minimum distributions [of an IRA] during your lifetime are based on a distribution period that is generally determined using Table III (Uniform Lifetime) in Appendix B.

I am confused because there are different tables with different life expectancies.

This is the table used by the IRS calculator. That is itself confusing because it uses the factor of 27.4 for age 72.
https://www.investor.gov/financial-tools-calculators/calcula…

IRA Required Minimum Distribution Worksheet, Table III Uniform Lifetime (this is a pdf so I can’t post the link)

Age Distribution Period
70 27.4
71 26.5
72 25.6
73 24.7
74 23.8 >>

There is an fundamental ERROR in the table you posted. There are ZERO RMDs for age 70 or 71 in the 2022 table.

The link at the bottom of the page (https://www.investor.gov/financial-tools-calculators/calcula…) unfortunately links to:

“Publication 590-B (2020), Distributions from Individual Retirement Arrangements (IRAs)
For use in preparing 2020 Returns”

IOW, it’s obsolete!

For DH & yourself: under the SECURE Act, RMDs from your own IRAs/401k/403b/etc. don’t start until the account holder turns 72.

This link has correct tables: https://thefinancebuff.com/new-rmd-tables-2022.html

The 27.4 distribution period applies to age 72 using the 2022 Table III (Uniform Lifetime Table), which is when you & DH will each begin RMDs.

Bottom line-
Table I – Single Life Expectancy. Use for IRAs inherited before 2021 (There are NO RMDs for IRAs inherited from 1 JAN, 2021 by most non-spouses. IRA must be liquidated using 10 year rule)

Key quote from Finance Buff article:
<<Now, if you already started taking RMDs from an inherited account and the tables changed, the IRS allows you a one-time reset in 2022.
You look up the factor in the new Single Life Table for the year when you first started taking RMD from the inherited account. Then you reduce that factor by the number of years since then. This makes as if the new tables were in effect back when you started. After this one-time reset in 2022, you continue to reduce the factor by 1 in each subsequent year.>>

It’s confusing but it works like this (I think):

You are 69 in 2022. Assume Mom passed when you were 66. Under the old table, age 66 factor is 20.2.
New 2022 table age 66 factor is 22.
Three years have elapsed (22-3= 19) so, 19 is the factor you would use this year. (Write it down)
Next year subtract 1, 2023 factor will be 18 and so on.
Do NOT reference the table again (it’s only to get you started), just keep subtracting 1 each year.

Table III- Uniform Life Table. Use for DH in 2 years & you in 3 years for RMDs out of your own IRA.

16

SnootFool:

This link has correct tables: https://thefinancebuff.com/new-rmd-tables-2022.html

. . .

Key quote from Finance Buff article:

<<Now, if you already started taking RMDs from an inherited account and the tables changed, the IRS allows you a one-time reset in 2022.
You look up the factor in the new Single Life Table for the year when you first started taking RMD from the inherited account. Then you reduce that factor by the number of years since then. This makes as if the new tables were in effect back when you started. After this one-time reset in 2022, you continue to reduce the factor by 1 in each subsequent year.>> [emphasis added]

I am not familiar with Finance Buff.

Do you (or anyone else) have a cite to the Code, regs. or otherwise more authoratative source for the one-time reset?

Regards (and curiously),

JAFO

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17

SnootFool-
<<It’s confusing but it works like this (I think):

You are 69 in 2022. Assume Mom passed when you were 66. Under the old table, age 66 factor is 20.2.
New 2022 table age 66 factor is 22.
Three years have elapsed (22-3= 19) so, 19 is the factor you would use this year. (Write it down)
Next year subtract 1, 2023 factor will be 18 and so on.
Do NOT reference the table again (it’s only to get you started), just keep subtracting 1 each year.>>

Math is hard.

As aj485 pointed out upthread-
<<Other designated beneficiary. Use the life expectancy listed in the table next to the beneficiary’s age as of his or her birthday in the year following the year of the owner’s death. Reduce the life expectancy by 1 for each year since the year following the owner’s death.>>

So, if Mom passed the year you turned 66, you would use the new age 67 factor (21.2) & reduce it by 2 to get 19.2 (not 19 as in my original example) as your 2022 factor. Subtract 1 for next year, etc.

18

JAFO31
<<I am not familiar with Finance Buff.

Do you (or anyone else) have a cite to the Code, regs. or otherwise more authoratative source for the one-time reset?>>

I’m sure aj485 will be along to cite the proper IRS/CFR link, but in the interim, here’s proof The Finance Buff isn’t crazy-

Ed Slott- https://www.irahelp.com/slottreport/hitting-reset-button-202…

<<However, beneficiaries (other than spouses) who inherited before January 1, 2022 and are using the Single Life Expectancy Table will be required to “reset” their 2022 RMD. Here’s how it works:

  1. For 2022 RMDs, beneficiaries do not use the new Single Life Expectancy based on their age in 2022.

  2. Instead, use the new Single Life Expectancy Table to determine what the life expectancy factor would have been for the very first RMD under the new table. (Assume the new table was in existence back when the first RMD was calculated.)

  3. Then, subtract 1 year for each succeeding year to arrive at the 2022 life expectancy factor.

Example: Justin’s father died in 2018 and left him an IRA. For his first required distribution in 2019 (when he turned age 57), Justin used a 27.9-year life expectancy factor under the previous Single Life Expectancy Table. Justin’s 2020 RMD was waived by the CARES Act. His 2021 RMD was calculated using a 25.9-year factor (27.9 - 2). In 2022, Justin turns age 60. Under the new Single Life Expectancy Table, the life expectancy factor for a 60-year-old is 27.1. However, Justin cannot use that factor. Instead, he must reset his 2022 RMD by determining what his life expectancy factor would have been in 2019 (at age 57) under the new table. That factor is 29.8. Justin then subtracts 3 years (for 2020, 2021 and 2022) from that factor to produce a 26.8 life expectancy factor for his 2022 RMD.>>

PS- The Finance Buff is great.

19

Thank you Snootful.

I am familiar with Ed Slott and assume that more will post.

I can follow the math; my spouse inherited an IRA (non-spouse, deceased had not and was not required to have started RMDs prior to death).

What I find interesting is your Rd Slott quote suggests that the reset is mandatory, whereas Finance Buff wrote that it was permissive optional - “the IRS allows you a one-time reset in 2022”.

One more detail t track down.

Regards, JAFO

20

JAFO31-
<<What I find interesting is your Ed Slott quote suggests that the reset is mandatory, whereas Finance Buff wrote that it was permissive optional - “the IRS allows you a one-time reset in 2022”
One more detail to track down.>>

99.99% sure it’s mandatory to do the reset. I think Finance Buff used an ambiguous word- I think he used ‘allows’ to mean “Our masters at the IRS have deigned to give us a better deal,” but it does give rise to the (wrong) notion that the reset is optional. It’s not.

More grist for the mill:

https://www.lordabbett.com/en-us/financial-advisor/insights/…
<<Where it gets complicated

The IRS included a TRANSITION RULE [emphasis added] for non-spouse beneficiaries who inherited an IRA prior to January 1, 2022 after RMDs have begun, and who are currently using the Single Life Table. The transition provides a “reset” for the life expectancies using the new tables. Therefore, table changes for 2022 will be more complicated.

There will be a one-time reset (“redetermination”) of the life expectancy that year. The beneficiary will “go back” to the year after the year of owner’s death and find his/her (i.e., beneficiary’s not the deceased) single life expectancy as of his/her age in that year using the new table. Subsequently, one year will be deducted from the new life expectancy for each year since the first distribution year to arrive at the divisor for the relevant post-2021 year.>>

https://www.cnbc.com/2022/01/19/how-new-life-expectancy-tabl…
<<This year, you get a one-time reset: Look at the factor in the single life table for the age you were when you began taking those RMDs and reduce that number by one for each year that has passed.

“It’s looking at it as if the new table was in effect when you inherited the account,” Slott said. “But it doesn’t affect the RMDs you’ve taken since then.”

Once you do the reset, you continue reducing your factor by one each year.>>

Based on everything I’ve read, there isn’t a (legal) option to just use the 2022 table for your current age if you have already been taking RMDs from a pre-2020 inherited IRA.
Granted, I learned about this ‘reset’ about 12 hours ago, so I would hardy call myself an expert.
As Lincoln said about info on the Internet- ‘Trust, but verify.’

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