lphauck
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Retirement tax questions

I don't know if this information is correct, but I pasted your exact question in BARD and received the following response.  I tried to verify the response from the links, but could not find any guidance on the transition.  Also note that it says " For beneficiaries who inherited the IRA before January 1, 2022: They CAN continue using the old life expectancy table....   It doesn't say you MUST ...

 

BARD (12/26/2023) 

No, your understanding is not entirely correct. While the new Single Life Expectancy table does indeed show a longer life expectancy at age 53 (33.4 years compared to 11.4 years in the previous table), the IRS has provided transition rules for applying the new table to existing inherited IRAs.

Here's how it works:

  • For beneficiaries who inherited the IRA before January 1, 2022: They can continue using the old life expectancy table (with one-year reductions) to calculate their RMDs for five years, starting from the year of inheritance. This means, for a beneficiary who inherited the IRA in 2018 and is 53 years old in 2023, they would use a life expectancy of 10.4 years (11.4 years minus one year for each year since inheritance) for their 2023 RMD calculations.
  • After the five-year transition period: Beneficiaries must then switch to using the new life expectancy table, with one-year reductions as usual.

Therefore, in your example, the beneficiary would not use the full 13.4 years from the new table for their 2022 RMD calculation. They would still use the old table with a one-year reduction, resulting in a life expectancy of 10.4 years.

Here are some resources for further information:

I hope this clarifies the application of the new Single Life Expectancy table to inherited IRAs. It's important to remember the transition rules to ensure you're calculating your RMDs correctly. If you have any further questions or require specific guidance based on your situation, it's recommended to consult with a tax professional.

 

Ignore the post above that was created by BARD.  I found the answer.  You do not need to use the OLD tables for 5 years.

 

See "Publication 590-B (2022), Distributions from Individual Retirement Arrangements (IRAs)" which contains these 2 paragraphs"

 

Revised life expectancy tables for 2022. If you are a beneficiary who was taking required minimum distributions prior to 2022 based on your life expectancy in the year following the owner’s death using the life expectancy tables in effect before 2022 and reducing that number by 1, you can reset your life expectancy for 2022 based on the new tables. In order to do this, find your life expectancy based on your age in the year following the owner’s death on Table I and reduce that number by 1 for each year since the year of the owner’s death.

Example. Your father died in 2019 at the age of 80 and you were the designated beneficiary. You started taking required minimum distributions from the inherited IRA in 2020 when you were age 55, using a life expectancy of 29.6 and reducing that number by 1 each year so that in 2023 (3 years later) the required minimum distribution would be determined by dividing the account balance by 26.6 (29.6 – 3). However, under the new life expectancy tables, the life expectancy for a 55-year-old is 31.6; therefore, you calculate your required minimum distribution for 2023 by dividing the account balance by 28.6 (31.6 – 3).

 

‎December 26, 2023 7:31 AM
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