In November 2020, the IRS proposed new life expectancy tables for calculating required minimum distributions (RMDs) from IRA and employer sponsored retirement plans, such as the Thrift Savings Plan (TSP).
Now, more than a year later, the tables will go into effect on January 1st, 2022 and will impact a significant number of federal employees and retirees.
This change will also affect employees and retirees who are taking lifetime RMDs from an inherited IRA, employees over age 72 taking RMDs from their own traditional IRAs, and federal retirees who must take RMDs from their TSP accounts, their own traditional IRAs and qualified retirement plans they may have previously participated in.
The following revised three IRS life expectancy tables are here . The three tables will appear in the 2021 IRS Publication 590-B (Distributions from Individual Retirement Arrangements), which should be available for download at www.irs.gov in early 2022:
The Three New Life Expectancy Tables
- Uniform Lifetime Table (shown in part below). This table is used to calculate lifetime RMDs for an account owner’s own IRA or retirement plan participation, including the TSP.
Uniform Lifetime Table
- Joint and Last Survivor Life Expectancy Table. This table is used when a spouse is the sole IRA or qualified retirement plan beneficiary and that spouse is more than 10 years younger than the IRS owner or retirement plan participant, including the TSP.
- Single Life Expectancy Table (some revisions in the table below). Under the SECURE Act, this table is only used to calculate post-death RMDs for “eligible designated beneficiaries.” This includes a surviving spouse, minor child of the IRA owner, chronically ill or disabled individual, and those individuals who are not more than 10 years younger than the IRA account owner. The single life expectancy table is also used if an IRA owner dies after the required beginning date (RBD) without naming a living beneficiary.
Single Life Expectancy Table (for Inherited IRAs)
April 1st is the RBD of the year following the year the IRA owner becomes age 72 (if born after June 30,1949 or age 70.5 if born before July 1, 1949). The single life expectancy table is to calculate RMDs from inherited IRAs for beneficiaries who inherited IRAs before the passage of the SECURE Act (January 1st, 2020).
Please remember that the Single Life table is never used by traditional IRA owners or retirement plan participants, including TSP participants, to calculate their RMDs.
If you would like to learn more about how to calculate your RMDs, please contact us at Federal Benefits Service. One of our trained and licensed professionals will be able to walk you through examples and answer any questions you have about your TSP and retirement plan.
