24 | May/June 2022 | BAEC Bulletin Death & Taxes
New Life Expectancy Tables for Retirement Plans In November 2019, the IRS published new actuarial/life expectancy tables to be used for determining required minimum distributions for 2021 and later years. See Prop. Reg. 1.401(a)(9)-9, published in the Federal Register Vol. 84, No. 217, 11/8/19, pp. 60812-60833. The final version was adopted in November 2020, with slight changes in the tables and a new effective date: The new tables will apply for 2022 and later years, not 2021 as previously announced. The old tables apply to 2021. The new tables reflect a longer life expectancy. One interesting effect is that RMDs for some inherited IRAs may be recalculated to lengthen the duration of the payout. For beneficiaries of IRAs that were inherited prior to 2021 the new tables will permit a one-time redetermination of Required Minimum Distributions (RMDs). Prior to 2021, non-spouse beneficiaries of inherited IRAs could take RMDs based upon their life expectancy in the year of the decedent’s death. The beneficiary would look up her life expectancy factor in the Single Life Table. To determine the amount of her RMD for the year following the year of the decedent’s death, the beneficiary would take the value of the IRA on December 31 in the year of death, and divide it by the life expectancy factor for her age in the year of death. In the next year, the beneficiary would take the previous year’s factor and subtract 1, for the divisor for year 2. And so on each year. The new tables permit beneficiaries of pre-2021 IRAs to go back and re-determine the first-year RMD factor using the new life expectancy factors, as if the new factors had been in effect when the decedent died. For instance assume Richard died in 2017 leaving an IRA to sister Marcia age 72. According to the table then in effect, Marcia had a life expectancy of 15.5 years. So, in 2018 the value of the IRA at year- end 2017 would be divided by 15.5 and the resulting RMD had to be taken by Marcia in 2018. In 2019 the divisor would be one less, or, in other words, 14.5. Each subsequent year the divisor is reduced by 1. However, now Marcia can go back and use the new single life table, which has a 17.2 life expectancy factor for someone age 72. She can then re-start the calculations as if the tables had been in effect in 2017. She cannot put money back into the IRA on account of years 2018 to 2021, but the RMDs for 2022 and thereafter will be a bit smaller.
PETER J. BREVORKA Partner, Brevorka Law Firm, P.C.
JILLIAN E. BREVORKA Partner, Brevorka Law Firm, P.C.
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