EXECUTIVE SUMMARY
After several years of speculation and more than a year since the President issued an Executive Order on “Strengthening Retirement Security in America”, the IRS has released its proposal to update the life expectancy tables used to calculate the annual Required Minimum Distributions (RMDs) from all sorts of tax-preferenced accounts, including IRAs and 401(k)s, for both lifetime account owners and their (stretch) beneficiaries. Most notably, this is the first time the tables have been updated since 2002, despite the fact that life expectancy has increased more than 2% (or 1.6 years) for all Americans, and more than 8% for Americans who have reached the age of 65!
Central to the proposal (which must still go through the formal approval process and thus might not “go live” until sometime next year, though the proposed changes wouldn’t take effect until 2021 anyway) are updates to the RMD factors used to calculate required minimum distributions themselves in each of the three different life expectancy tables, including the Uniform Lifetime Table (for retirement account owners to calculate their RMDs during their lives), the Joint Life And Last Survivor Expectancy Table (used by account owners who have named a spousal beneficiary who is more than 10 years younger), and the Single Life Expectancy Table (which is used by beneficiaries of inherited retirement accounts to calculate their so-called “stretch” distributions).
