I was able to obtain the updated tables that are effective for 2022. Just so I’m clear on this; if a client has been taking RMDs since 2017 (70 1/2), on the old table which is the table that is being used in 2021; he would have a life expectancy factor of 22.9. In 2022, I’m assuming this client would no longer follow the old table and will now calculate his 2022 RMD from the new table and use 24.6 as the factor?
Yes, there is a new joint life table as well for owners with a sole beneficiary spouse more than 10 years younger. But because of the annual 1.0 divisor reduction for beneficiaries taking LE distributions, the divisor must be re set to what it would have been had the new tables existed when RMDs began. This is a one time adjustment consisting of looking at the new tables for beneficiary age in the year after death (unless owner’s age was used), then reducing that divisor for 1.0 for each year thereafter. Then in 2023, all that needs to be done is to reduce the 2022 divisor by 1.0 etc each year thereafter as before. See p 72473 of the following IRS Reg.
Federal Register :: Updated Life Expectancy and Distribution Period Tables Used for Purposes of Determining Minimum Required Distributions
so to recap on what you are saying is that if I have a client who has been reducing their RMD each year by 1 for the past 17yrs since they wer age 25, we are to now use the new Single life table, look back to the age of 25 for 2022 RMD calculations and then begin reducing by 1 each year after beginning 2023?
No. Look up divisor in new tables for age 25, then determine how many years have passed since then and reduce the divisor 1.0 for each year up to 2022 to get the new 2022 divisor. Then continue the reductions after 2022. This does not change any RMD prior to 2022, just generates the correct divisor for 2022 and beyond.
Yes, I believe we are saying the same thing. I just didn’t word it very good. client was 25 when she began Bene RMDs in 2004client now needs to reset their divisor from new Single life tableclients new initial divisor is 60.2 (from the new table under the age of 25) reducing by 1 each year bringing the 2022 divisor to 42.2
Are the distribution from Beneficiary/Inherited IRA (Non Spouse) is reported as Death Disteribution Code? Or are they Normal/Qualified Distribution…
The beneficiary 1099R should be coded 4 (death distribution). That will waive any 10% penalty that might otherwise have applied. However, if the beneficiary IRA is a Roth IRA, code 4 does not apply. Codes Q or T should be shown instead.
Permalink Submitted by Alan - IRA critic on Tue, 2021-08-10 16:45
Yes, 24.6 from the new table is correct if client turns 75 in 2022. Owner RMDs will be simple to determine. However, for beneficiaries taking LE RMDs from the single life table, it is more complex due to the 1.0 annual divisor reduction. The 2022 beneficiary RMD will have to be reset to what the divisor would have been in their first beneficiary RMD year with the new table, then 1.0 reduction for each year through 2022
Permalink Submitted by Wendy Mommaerts on Wed, 2021-08-11 13:03
1) I would assume that any inherited IRA that’s already in existence would continue to follow the schedule that they are currently on? 2) Client who are using the Joint life table because spouse is more than 10yrs younger, will begin using the new Joint table?