IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

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One Ping
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IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by One Ping »

A while back there was a discussion about the IRS IRA RMD Worksheet located here and whether it was correct for calculating RMDs under the SECURE Act for years 2022 and beyond. [I looked for the thread but could not crack the google code to find it, so this may be old news. If so, sorry for the noise.]

The crux of the issue seemed to be that the worksheet refers to “the year you turn 70½” and whether that meant the worksheet was not valid. That worksheet is indeed INCORRECT for calculating RMDs under the SECURE Act for 2022 and beyond.

The problem is not only does it have the incorrect age for starting RMDs (which is at best confusing), it also has the incorrect uniform life table divisors for 2022 and after. To make matters more confusing it is where you are directed if you go to the IRS Required Minimum Distribution Worksheets page, which could also lead to some confusion.

I found the correct SECURE Act divisors for RMDs for 2022 and beyond in the Federal Register here. (See Table 2 to paragraph c (Uniform Life Table) under § 1.401(a)(9)-9 Life expectancy and distribution period tables.)

The table is reproduced below here for convenience:

Code: Select all

Uniform Lifetime Table 					
Age	Divisor	Age	Divisor	Age	Divisor
72	27.4	89	12.9	105	4.6
73	26.5	90	12.2	106	4.3
74	25.5	91	11.5	107	4.1
75	24.6	92	10.8	108	3.9
76	23.7	93	10.1	109	3.7
77	22.9	94	9.5	110	3.5
78	22.0	95	8.9	111	3.4
79	21.1	96	8.4	112	3.3
80	20.2	97	7.8	113	3.1
81	19.4	98	7.3	114	3.0
82	18.5	99	6.8	115	2.9
83	17.7	100	6.4	116	2.8
84	16.8	101	6.0	117	2.7
85	16.0	102	5.6	118	2.5
86	15.2	103	5.2	119	2.3
87	14.4	104	4.9	120+	2.0
88	13.7				
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goshenBogle
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by goshenBogle »

Ok, now I am confused. :(

For RMDs for 2021, which table do we use when calculating RMDs for IRAs we owned as of 12/31/2020?
The life table I am using from the IRS worksheet at https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf indicates that at age 72 the divisor = 25.6. But in the new table that you present, at age 72 the divisor = 27.4.

This is a huge difference. So which do we use for 2021 when calculating RMDs for IRAs we owned as of 12/31/2020?
Or do the divisors change for 2022 for IRAs we owned as of 12/31/2021?
Or am I just confused (which is easy to do)?
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sport
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by sport »

Use the old tables for this year. The new tables go into effect next year (2022).
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One Ping
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by One Ping »

goshenBogle wrote: Thu Oct 21, 2021 1:20 pm Ok, now I am confused. :(

For RMDs for 2021, which table do we use when calculating RMDs for IRAs we owned as of 12/31/2020?
The life table I am using from the IRS worksheet at https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf indicates that at age 72 the divisor = 25.6. But in the new table that you present, at age 72 the divisor = 27.4.

This is a huge difference. So which do we use for 2021 when calculating RMDs for IRAs we owned as of 12/31/2020?
Or do the divisors change for 2022 for IRAs we owned as of 12/31/2021?
Or am I just confused (which is easy to do)?
From the Federal Register reference linked in the OP:
Federal Register wrote:Applicability Date: The final regulations in this document apply to distribution calendar years (as defined in § 1.401(a)(9)-5, Q&A-1(b)), beginning on or after January 1, 2022.
and
Federal Register wrote:IV. Effective/Applicability Date

The life expectancy tables and Uniform Lifetime Table under these regulations apply for distribution calendar years beginning on or after January 1, 2022. Thus, for example, for an IRA owner who attained age 701/2 in February of 2020 (so that the individual attains age 72 in August of 2021 and the individual's required beginning date is April 1, 2022), these regulations do not apply to the minimum required distribution for the individual's 2021 distribution calendar year (which is due April 1, 2022) but will apply to the minimum required distribution for the individual's 2022 distribution calendar year (which is due December 31, 2022).
Sounds like you have it figure out.
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by One Ping »

As an aside ... an interesting observation.

If you have a 12/31/2020 $1,000,000 IRA balance, and you are 71 this year, using the current uniform life table your divisor is 26.5, giving you a RMD of $37,735.85.

Next year you are 72 and assuming a 12/31/2021 $1,000,000 balance, using the new uniform life table you divisor is 27.4, giving you a RMD of $36,496.35.

For a constant balance you would assume as you age your divisor would go down, increasing your RMD. It ain't necessarily so during this transition to the new table.
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Alan S.
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by Alan S. »

One Ping wrote: Thu Oct 21, 2021 1:58 pm As an aside ... an interesting observation.

If you have a 12/31/2020 $1,000,000 IRA balance, and you are 71 this year, using the current uniform life table your divisor is 26.5, giving you a RMD of $37,735.85.
Point made that the divisor for most of those taking RMDs in 2021 will have a higher divisor (lower RMD) as a % in 2022 than 2021.

However, if you reach 71 anytime this year, you will not have any RMD for 2021 as your RMDs will start at age 72 using the new tables.
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by One Ping »

Alan S. wrote: Thu Oct 21, 2021 9:41 pm
One Ping wrote: Thu Oct 21, 2021 1:58 pm As an aside ... an interesting observation.

If you have a 12/31/2020 $1,000,000 IRA balance, and you are 71 this year, using the current uniform life table your divisor is 26.5, giving you a RMD of $37,735.85.
Point made that the divisor for most of those taking RMDs in 2021 will have a higher divisor (lower RMD) as a % in 2022 than 2021.

However, if you reach 71 anytime this year, you will not have any RMD for 2021 as your RMDs will start at age 72 using the new tables.
touche'
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Goodmand3
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by Goodmand3 »

At the risk of beating that dead horse once again on the appropriate Uniform Life Expectancy tables in effect for the taxable year ending 12/31/21, I am understanding that the old (if old is the correct word to use here) tables are in effect for that RMD calculation. Thus, if I were to be 78 in 2022, the divisor would be 20.3.

I need your help in telling whether my understanding is correct or not? So far, my accountant tells me I am correct and my Vanguard account statement re RMD tells me I am not. Vanguard says the divisor is 22.0.

Thanks for help in clarifying this situation.
prd1982
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by prd1982 »

Goodmand3 wrote: Thu Feb 03, 2022 7:59 pm At the risk of beating that dead horse once again on the appropriate Uniform Life Expectancy tables in effect for the taxable year ending 12/31/21, I am understanding that the old (if old is the correct word to use here) tables are in effect for that RMD calculation. Thus, if I were to be 78 in 2022, the divisor would be 20.3.

I need your help in telling whether my understanding is correct or not? So far, my accountant tells me I am correct and my Vanguard account statement re RMD tells me I am not. Vanguard says the divisor is 22.0.

Thanks for help in clarifying this situation.
Get a new accountant. The correct answer is 22.0.
Goodmand3
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Re: IRS RMD Worksheet heads-up for RMDs for 2022 and beyond

Post by Goodmand3 »

Thanks for the help prd1982.
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