November 2020

Use of the New RMD Tables Postponed Until 2022

An IRA custodian/trustee has the duty each year to furnish an RMD Notice to all affected IRA accountholders by January 31 of each year. The 2020 RMD Notice had to be furnished by January 31, 2020. The 2021 RMD Notice must be furnished by January 31, 2021.

The IRS in November of 2019 had issued revised proposed life expectancy tables otherwise known as mortality tables. The current tables were created in 2002. The IRS finally concluded in 2019 that its three life expectancy table should be updated to reflect the fact that life expectancy in the United States had improved over the last 18 years. The three tables are Uniform Lifetime Table, Single Life Table and the Joint and Last Survivor Table. The IRS guidance was – the 2020 RMD calculations will still be made using the current table but the new 2019 tables would be used for the 2021 RMD calculations.

Then COVID-19 happened. The CARES Act was enacted on March 27, 2020. All 2020 RMDs were waived. RMDs for 2020 were calculated using the 2002 RMD tables as set forth in the final regulation, 1.401(a)(9).

Until recently it was understood that an IRA custodian/trustee had to furnish a 2021 RMD notice by January 31, 2021. That 2021 RMD was to be prepared using the revised life expectancy tables as issued in November of 2019.

On November 5, 2020, the IRS announced it was adopting its proposed regulation as a final regulation. There were a few changes, including replacing the 2019 tables with the revised 2020 tables and postponing the use of these 2020 tables until 2022. This means then that the 2002 tables will still be used for the 2021 RMD calculations.