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Nov 28

Growth of your investment in your IRA is effectively untaxed. That’s nice, but it’s not monumental. Business valuation & discount pricing. and services for tax and accounting professionals. The IRS published proposed changes to RMD percentages in November. The changes, which were proposed in 2019 (see our Checkpoint article), generally lengthen distribution periods to reflect longer life expectancies and allow participants to keep larger amounts in their retirement plans for their later years. brands, Social Notably, while such individuals may, in fact, wait until (as late as April 1,) 2021 to take that first RMD, that RMD is for 2020. You have a small gain in lower taxes now. How will lower RMD percentages in 2021 affect you? The driving issue for us is the shockingly low probability that both of us will be alive in, say, ten years. The IRS published proposed changes to RMD percentages in November. corporations, For I like that, but that’s not a monumental amount. The IRS has finalized regulations updating the tables used by retirement plans (including 401(k) plans) to calculate required minimum distributions (RMDs). Even though that RMD is taken in 2021, the RMD is for the year 2020. 72472 (Nov. 12, 2020), Available at https://www.govinfo.gov/content/pkg/FR-2020-11-12/pdf/2020-24723.pdf. These tables may also be relevant for determining whether the 10% additional tax on early distributions applies to a series of substantially equal periodic payments. * The IRS has a different Table – with higher RMD Factors – if your spouse is at least 11 years younger. On Thursday, November 7, the Service released 122 pages describing proposed regulations which will modify Required Minimum Distributions (RMDs). RMD percentages will be lower starting in 2021. The percentage changes are a fraction of a percent. Patti and I don’t want to make the mistake of spending too little at this stage in life. research, news, insight, productivity tools, and more. You can! Share on google. Explore all Land information What’s the chance you’ll see a real increase in your Safe Spending Amount in the next five years. The factor would be calcu­lated using the existing life expectancy tables, not the new life expectancy tables effective in 2021. The IRS has not updated their life expectancy tables for 18 years, so that’s a lot of years to accumulate small annual increases in life expectancy for each year of age. My conclusion is that the changes don’t really mean much to you. The rule making process will be completed this year and new, lower RMD percentages will likely take effect for 2021. Should you Increase your Mix of Bonds as you get older? accounts, Payment, Thomson Reuters/Tax & Accounting. As a reminder, an IRA owner who attains age 72 in 2021 has a required beginning date of April 1, 2022, but his/her first distribution calendar year is 2021; therefore, the divisor used to calculate his/her 2021 RMD will be taken from the current Joint and Last Survivor Table or from the Uniform Lifetime Table, whichever applies. Your email address will not be published. My RMD% will be lower next year than this year: my RMD% for my current age 75 is 4.37%. This post describes those changes and what I think that means for us retirees.

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