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To Distribute or Not? That’s the IRA Question

April 11, 2022
By: Kim Ressler, Vice President and Wealth Trust Advisor, CFP®, CTFA, CGC

Older couple sitting together at computer.

Effective January 1, 2022, the IRS issued new life expectancy tables. It makes sense because people are living much longer thanks to modern-day medical treatments. It has been two decades since they updated their tables, so we were due for an adjustment. These new life expectancy tables allow retirees and their beneficiaries to take less of a required minimum distribution (RMD), but only if distributions are calculated correctly using the new table. Your financial advisor can help ensure that your RMD is correctly calculated. Thankfully, the rules for using the new tables are easy to understand and apply.
The IRS changed the beginning start date for RMDs from age 70½ to 72 with the SECURE ACT of 2019, allowing retirees to delay their distributions. For those who have already started taking their RMDs, the new tables should be used going forward, and for those who turn age 72 in 2022 or after, the new life expectancy tables should be applied.
Those people who are just beginning their RMDs can delay taking their first distribution until April 1 of the following year. Some may have the advantage of waiting, but most do not see a benefit. If you delay your first distribution until the year after you turn 72, you will be not only be required to take the first payout in that year, but you will also need to take out the current year’s RMD, which will cause both distributions to be taxable in one tax year.
RMDs are recalculated each year by returning to the most recent life expectancy table to obtain the period divisor factor and dividing that into the ending market value of the previous year. For example, in the year 2022, the market value of the IRA to be used in the calculation would be 12/31/2021. It is important to note that ROTH IRAs do not have any distribution requirements unlike Traditional IRAs.
Your RMDs must be calculated correctly. An incorrect calculation can cause headaches for the individual and potentially result in penalties or not getting the full advantage of the available income tax deferral. The new life expectancy table is below for your reference. This can assist you in getting an idea of what you will need to take once you reach the age of 72. This information is meant to only provide you with the opportunity to project distribution amounts. You should consult with your Girard Advisor or tax professional before making any distributions. Contact us to have a conversation.

Distribution Periods 2021 and Before Distribution Periods 2022 and After
Distribution Period
Distribution Period
72 25.6 72 27.4
73 24.7 73 26.5
74 23.8 74 25.5
75 22.9 75 24.6
76 22.0 76 23.7
77 21.2 77 22.9
78 20.3 78 22.0
79 19.5 79 21.1
80 18.7 80 20.2
81 17.9 81 19.4
82 17.1 82 18.5
83 16.3 83 17.7
84 15.5 84 16.8
85 14.8 85 16.0
86 14.1 86 15.2
87 13.4 87 14.4
88 12.7 88 13.7
89 12.0 89 12.9
90 11.4 90 12.2

Source: Internal Revenue Service


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This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. The information in this article, and any opinions expressed therein, do not constitute a recommendation or an offer to buy or sell any security or financial instrument. Viewers should consult with their financial and/or legal professionals before making any financial decisions.