IRS Actuarial Tables Updated, Retirees Can Keep More in their IRAs

By Stephen J. Silverberg
New York Elder Law Attorney

It has been 20 years since the IRS last updated its actuarial tables – the ones used to indicate how much taxpayers must take from their retirement accounts. For the first time in many years, retirees can keep more money in their tax-deferred accounts starting at age 72.

The new tables reflect a longer lifespan, which is surprising, given recent reports of American life expectancy decreasing, mainly because of COVID. But we will not question the IRS’ decision, which makes it possible for retirees to keep more money in their IRAs (traditional and Roth), 401(k)s, and other tax-deferred retirement savings accounts.

Traditional IRAs and 401(k)s encouraged wage earners to save for retirement. They allow the deferral of income taxes until owners take money out of the accounts. But there is only so much waiting until Uncle Sam wants those revenues, so starting at a certain age—72— Required Minimum Distributions (RMDs) must commence and are taxed as ordinary income.

RMDs prevented taxpayers from keeping money out of the tax rolls indefinitely. However, today’s billionaires are likely to have an enormous IRA as having a heliport on their ranch in Montana.

Previously, RMDs commenced at age 70.5, but the SECURE Act of 2019 changed when RMDs began. If you reached 70.5 in 2019, you had to comply with the old law and take your first RMD by April 1, 2020. If you reach age 70.5 in 2020 or later, you must take your first RMD by April 1 of the year after you become 72.

RMDs apply to traditional IRAs, SEP IRAs, 401(k)s, 403(b), 457(b), profit sharing plans, and other defined contribution plans. Roth IRAs and Roth SEPs do not have RMDs.

Why is this good news? The IRS has effectively raised the life expectancy for Americans from 82.4 to 84.6, so retirees can extend their retirement accounts over more years. Smaller RMDs mean more funds remain in investment accounts and smaller tax bills.

Good news from the IRS!


Reference: Yahoo! Finance (June 15, 2022) “Good News for Retirees: RMD Formula Changing for First Time in Decades”

About the Author
Stephen J. Silverberg is nationally recognized as a leader in the areas of estate planning, estate administration, asset preservation planning, and elder law. He is a past president of the prestigious National Academy of Elder Law Attorneys (NAELA), and a founding member and past president of the New York State chapter of NAELA.