Distribution table to use?

Submitted by Alan Myers on Tue, 2023-10-24 01:00

I have two clients that have an inherited IRA. They started taking distributions prior to 2020. I know the distribution tables changed in 2022 but what I don’t know is does this client use the old table or the new one for ongoing withdrawals? One client is eligible to extend the IRA over her life and we are doing that. The other client’s father passed after the change, so he is subject to the 10-year total withdrawal rule.

Do we still use the tables that were in effect at the time they started or do we now use the new tables for all remaining withdrawals?

Thanks!
Alan Myers



Submitted by Alan - IRA critic on Tue, 2023-10-24 01:48

  • The divisors should be reset starting in 2022 to reflect the new tables. The process for doing that is to go back to the year after the owner passed to determine what the initial divisor would have been had the new tables been in use then. That new divisor is then reduced by 1.0 for each year thereafter. This will affect the 2022 and 2023 RMDs. 
  • Since the second beneficiary falls under the Secure Act and if the owner passed after their RBD, then annual RMDs are required in years 1-9 of the 10 year period. However, because the IRS has not finalized the proposed Regs, these annual beneficiary RMDs have been waived for 2021-2023 but are slated to be required starting in 2024. This waiver does not apply to beneficiary RMDs for the first beneficiary. 

Submitted by PaulC on Tue, 2023-10-24 14:09

The new tables use longer life expectancies to derive the divisors. That means that the required distributions under the new tables are lower than under the old tables. If someone mistakenly uses the old tables to determine distributions that will result in distributions HIGHER than required. That means there’s no issue of compliance with the rules that will need to be corrected, just a slightly accelerated distribution schedule over what’s required.

Submitted by Alan Myers on Wed, 2023-10-25 04:38

So  just to clarify both answers – for the client that is subject to the SECURE Act and the 10-year rule on the inherited IRA, since the IRS has not finished promulgating the rules and regs yet, he is not required to take an RMD this year but must start next year and must have the entire amount withdrawn within the ten years from the date of inheritance.As for the correct tables to you, we should be using the newer tables, which I knew had a longer life expectancy.  I don’t need to go back and make any adjustments as basically I took out more than the RMD if I used (or continue to use) the old tables.  Thanks for the help!

Submitted by Alan - IRA critic on Wed, 2023-10-25 14:28

  • Yes, the RMD has actually be exceeded, but client still needs to determine the correct divisor going forward under the new table. Since that divisor will be reduced by 1.0 each year, once the correct divisor is determined using the reset process mentioned above, the table will not need to be checked again. 
  • As for the new Regs, if the IRS can finalize them by mid year 2024, everyone assumes that a 2024 beneficiary RMD will be required for applicable 10 year rule beneficiaries, but since the IRS is already 3.5 years into this with no Regs finalized, anything can happen.
  • The 10 year rule end at the end of the 10 th year, not on the actual anniversary of the owner’s death.

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