Industry News

On November 8, 2019, the Internal Revenue Service (IRS) issued a notice of proposed rulemaking providing guidance for life expectancy tables and applicable distribution period tables for calculating required minimum distributions (RMDs) from qualified retirement plans, individual retirement accounts (IRAs) and annuities, and certain other tax-favored employer-provided retirement arrangements.

In the proposed regulations, the life expectancy tables and applicable distribution period tables reflect longer life expectancies than the tables in the existing regulations.  The new tables have been developed based on mortality rates for 2021.  These mortality rates were derived by applying mortality improvement through 2021 to the mortality rates from the experience tables used to develop the 2012 Individual Annuity Mortality tables, which are the most recent individual annuity mortality tables.  If finalized, the life expectancy tables and Uniform Lifetime Table under the proposed regulations would apply for distribution calendar years beginning on or after January 1, 2021.

Since the proposed regulations reflect longer life expectancies, the annual RMDs from qualified defined contribution plans, IRAs and certain other tax-favored retirement plans would be reduced.  As a result, the updates would help to increase the effectiveness of these tax-favored retirement programs by allowing retirees to retain more retirement savings in the programs for their later years.

Comments are due by January 7, 2020 and a public hearing is scheduled for January 23, 2020.

The proposed rules are available here.