IRS Proposes Changes to Life Expectancy Tables for Required Minimum Distributions | Lord Abbett
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Retirement Perspectives

To account for today’s longer life expectancy, a new proposal would lower required minimum distributions (RMDs), and may preserve more assets in tax-deferred accounts over the lifetime of the account owner.

On November 8, the IRS issued new proposed regulations for calculating required minimum distributions (RMDs) under section 401(a)(9) of the Internal Revenue Code. This follows the Trump administration’s executive order issued on August 31, 2018 that directed the Treasury Department to review the rules that apply to RMDs from qualified plans and IRAs.


According to the IRS, roughly 4.6 million individuals, or 20.5% of all individuals required to take RMDs from an affected retirement plan, will make withdrawals at the minimum required level in 2021.


The proposed regulations would account for increased life expectancy, thus reducing required distribution amounts from both qualified defined contribution plans (e.g. 401(k), 403(b) 457(b), Thrift Savings Plan (TSP)) and IRAs. Notably, the new regulations would apply to both account owners and beneficiaries. This is welcome news since the current tables have been in use for almost 20 years! As a result, lower RMDs may help investors preserve more assets in tax-deferred accounts over the lifetime of the account owner or their beneficiary.

Keep in mind, the new tables have only been proposed – the new regulations still must be go through the formal approval process (e.g. hearings and comment period) before becoming law. If it becomes law, the proposed changes would not take effect until 2021. RMDs for 2020 are not impacted.

Updates include each of the three different life expectancy tables:

1.  Uniform Life Table (used for account owners to calculate their RMD during their lifetime) ULT is used by all account owners except those who have named a spousal beneficiary that is more than 10 years younger.

2.  Joint Life and Survivor Table (account owners who have  a spousal beneficiary who is more than 10 years younger)

3.  Single Life Expectancy Table (used by all beneficiaries of inherited retirement accounts when the life expectancy method (“stretch”) is being utilized)

To illustrate the proposed changes in expected remaining lifetimes, see the table below for Single Life Expectancy used by all beneficiaries. The new proposed figures show longer expected remaining lifetimes than the current regulation.


Single Life Table
Years of expected remaining lifetimes for beneficiaries from current vs. proposed regulations

Source: Groom Law Group


Notably, individuals taking substantially equal periodic payments [72(t)] using current life expectancy tables will also be allowed to switch to the new tables without concern of modifying their current payment schedule. In addition, a transition rule applies for those beneficiaries using non-recalculated single life expectancies (reduce by 1) to calculate RMDs from inherited IRAs. They will be allowed to switch to the new life expectancy tables.

Advisors, if you have additional questions, please contact your Lord Abbett representative at 888-522-2388.


To comply with Treasury Department regulations, we inform you that, unless otherwise expressly indicated, any tax information contained herein is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax law, or (ii) promoting, marketing, or recommending to another party any transaction, arrangement, or other matter.

The information is being provided for general educational purposes only and is not intended to provide legal or tax advice. You should consult your own legal or tax advisor for guidance on regulatory compliance matters. Any examples provided are for informational purposes only and are not intended to be reflective of actual results and are not indicative of any particular client situation.

The information provided is not directed at any investor or category of investors and is provided solely as general information about Lord Abbett's products and services and to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither Lord Abbett nor its affiliates are undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity. If you are an individual retirement investor, contact your financial advisor or other fiduciary about whether any given investment idea, strategy, product or service may be appropriate for your circumstances.


Required minimum distribution (RMD) is the minimum amount you must withdraw from your account each year. You generally have to start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 70½. Roth IRAs do not require withdrawals until after the death of the owner.

Traditional IRA contributions plus earnings, interest, dividends, and capital gains may compound tax-deferred until you withdraw them as retirement income. Amounts withdrawn from traditional IRA plans are generally included as taxable income in the year received and may be subject to 10% federal tax penalties if withdrawn prior to age 59½, unless an exception applies.

A Roth IRA is a tax-deferred and potentially tax-free savings plan available to all working individuals and their spouses who meet the IRS income requirements. Distributions, including accumulated earnings, may be made tax-free if the account has been held at least five years and the individual is at least 59½, or if any of the IRS exceptions apply. Contributions to a Roth IRA are not tax deductible, but withdrawals during retirement are generally tax-free.

A SIMPLE IRA plan is an IRA-based plan that gives small-business employers a simplified method to make contributions toward their employees’ retirement and their own retirement. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or nonelective contributions. All contributions are made directly to an individual retirement account (IRA) set up for each employee (a SIMPLE IRA). SIMPLE IRA plans are maintained on a calendar-year basis.

A simplified employee pension plan (SEP IRA) is a retirement plan specifically designed for self-employed people and small-business owners. When establishing a SEP IRA plan for your business, you and any eligible employees establish your own separate SEP IRA; employer contributions are then made into each eligible employee’s SEP IRA.

401(k) is a qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on an aftertax and/or pretax basis. Employers offering a 401(k) plan may make matching or nonelective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.

A 403(b) plan is a retirement savings plan that allows employees of public schools, nonprofit, and 501(c)(3) tax-exempt organizations to invest on a pretax and or Roth aftertax basis. Contributions to a 403(b) plan are conveniently deducted directly from your paycheck. In addition, your employer may elect to make a contribution on your behalf.

A governmental 457(b) deferred-compensation plan allows employees of states, political subdivisions of a state, or any agency or instrumentality of a state to invest money on a pretax or Roth aftertax basis through salary reductions. The employer deposits amounts withheld into an annuity, custodial, or a trust account, where the funds accumulate tax-deferred or potentially tax free in the case of Roth aftertax contributions until withdrawals commence, usually at retirement.

A Thrift Savings Plan (TSP) is a tax-deferred retirement savings and investment plan that offers Federal employees the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans. By participating in the TSP, Federal employees have the opportunity to save part of their income for retirement and receive matching agency contributions.


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