Managing Money
New Life Expectancy Tables for Required Minimum Distributions
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or the first time in 20 years, the IRS has released new life expectancy tables for the purpose of calculating required minimum distributions (RMDs). While the switch
to the new tables will be straightforward for most retirement plan owners, a couple of situations are more complicated. There are three possible life expectancy tables that may be used for the purpose of calculating RMDs: the Uniform Lifetime Table, the Joint and Last Survivor Table, and the Single Life Table. The Uniform Table is used by all unmarried and married retirement plan owners whose spouse is not more than 10 years younger. The life expectancy factors found in the Uniform Table are based on the age of the retirement plan owner and a beneficiary who is exactly 10 years younger. Years ago, the IRS simplified the RMD process and permitted all retirement plan owners, regardless of their beneficiary’s actual age, to use the Uniform Lifetime Table. The Joint and Last Survivor Table calculates the life expectancy of two individuals and may be used by retirement plan owners whose spouse is the sole beneficiary and more than 10 years younger. Please note that while the IRS permits use of this table in this situation, the Thrift Savings Plan (TSP) restricts TSP participants to the Uniform Lifetime table regardless of their spouse’s age. The Single Life Table is used by beneficiaries who
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NARFE MAGAZINE APRIL 2022
are maintaining an inherited retirement plan and are subject to RMDs. This includes the surviving spouse of a TSP participant who is maintaining a beneficiary participant TSP account. The new tables are a positive development for owners and
ALL RETIREMENT PLAN OWNERS, REGARDLESS OF THEIR BENEFICIARY’S ACTUAL AGE, ARE ALLOWED TO USE THE UNIFORM LIFETIME TABLE TO CALCULATE RMDS. beneficiaries subject to RMDs— they add approximately two years of life expectancy, which means RMDs will be smaller now than they would have been under the old tables. For example, the life expectancy factor for a 72-yearold retirement plan owner is 27.4 under the new Uniform Lifetime Table compared with 25.6 under the old table. For most retirement plan owners, the update simply
means referring to the new tables to determine the life expectancy factor for 2022’s RMD, but there are a few situations in which the switch to the new tables is more complex. One example concerns retirement plan owners who were first subject to an RMD in 2021 but delayed their 2021 RMD until 2022. In this situation, even though the 2021 RMD is distributed in 2022, it’s still a 2021 RMD and must be based on the old tables. The 2022 distribution, which must be distributed by December 31, 2022, will be based on the new table. Another example involves nonspouse designated beneficiaries who have been taking RMDs from an inherited retirement plan prior to 2022. A nonspouse designated beneficiary uses the fixed-term method for determining the life expectancy factor each year. With the fixedterm method, a beneficiary refers to the Single Life Table only one time to determine the appropriate life expectancy factor—in the year after the year of the retirement plan owner’s death—for his or her first RMD. In each subsequent year, a nonspouse beneficiary simply subtracts one from the previous year’s factor to determine the current year’s life expectancy factor. To make the move to the new Single Life Table, nonspouse designated beneficiaries get a one-time reset. For 2022’s factor, instead of simply subtracting one
