The Internal Revenue Service (IRS) has issued a final rule updating life expectancy and distribution tables used to calculate required minimum distributions (RMD) from qualified retirement plans, individual retirement accounts and annuities, and certain other tax-favored employer-provided retirement arrangements. The final rule was published in the Federal Register on November 12, 2020. The RMD tables were last updated in 2002 and have been updated to allow for longer life expectancies.
In addition to the new RMD tables, various other changes related to retirement accounts have rolled out recently. Notably, the SECURE Act, enacted December 20, 2019, extended the age for which minimum distributions from retirement plans and individual retirement accounts (IRAs) must commence from age 70-1/2 to age 72 and also eliminated the maximum age for making contributions, eliminated stretch IRAs, and permitted transfer of certain annuities to eligible employer retirement plans and IRAs. Additionally, the CARES Act, enacted on March 27, 2020, provided for numerous relief provisions to ease financial difficulties related to the COVID-19 pandemic including a waiver of RMDs for retirement plans and IRAs in tax year 2020.
Financial institutions holding retirement accounts should be familiar with the revised minimum distribution tables and make adjustments to their processes if needed. The final rule was effective November 12, 2020, but is applicable to distribution calendar years beginning on or after January 1, 2022. Required minimum distributions for 2021 will follow current tables.
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IRA Compliance Offerings:
Compliance Resource is offering a two-hour IRA Review and Update webinar, conducted by Deborah Crawford, on February 2, 2021. If you would like us to notify you when registration opens, please email Brent Vincent at brent@mycomplianceresource.com.
