IRA BDA Question
Hello,
If a IRA BDA (non-spouse) has a life expectancy factor of 10 in 2020 and the RMD was skipped, would the life expectancy factor be 9 for 2021 or would it still be 10? I thought the factor would be 9 for 2021. My client is getting conflicting information and I wanted to confirm.
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2021-01-07 16:08
It would be 9. The correct divisor for 2021 is the same as it would have been had 2020 RMDs not been waived. Put another way, the 2020 waiver actually increases RMDs after 2021 by having no depletion of the IRA value in 2020 (unless the amount of the would be RMD or more is distributed in 2020 anyway). This will result in a higher 12/31/2020 value than it would have been and therefore higher RMDs in the future. In addition, if the IRA has been invested in stocks or stock MFs, the value increases even more. The 2021 RMD will grow and the IRS will recover some of the income they did not receive in 2020 due to the waiver. Client is getting incorrect info elsewhere.