3686 / How are the minimum distribution requirements met during an IRA owner’s lifetime?

Distributions from a non-Roth Individual Retirement Account (“IRA”) or annuity must begin by April 1 of the year after the year in which the owner reaches their required beginning date, whether or not the owner has retired.¹ Non-Roth IRA owners working beyond their required beginning date are not permitted to delay distributions until after retirement, even under an employer-sponsored plan such as a SEP or SIMPLE IRA. Unless the owner’s entire interest is distributed on or before the required beginning date, distributions of the balance must begin by that date and must, at a minimum, be distributed over the time period explained below.

No minimum distribution is required during life from a Roth IRA.

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Planning Point: RMDs were waived for 2020 only under the CARES Act.

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Uniform Lifetime Table

Required minimum distributions from a non-Roth IRA during the owner’s lifetime are calculated by dividing the owner’s account balance by the applicable distribution period determined from the RMD Uniform Lifetime Table.² The amount of an individual’s lifetime required distribution is calculated without regard to the beneficiary’s age, except in the case of a spouse who is the sole beneficiary and who is more than 10 years younger than the owner.³

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Planning Point: The IRS released new proposed life expectancy tables to be used in calculating required minimum distributions from both IRAs and employer-sponsored retirement plans. The new tables generally assume longer life expectancies and provide information needed to calculate RMDs for participants living to 120 (the previous tables stop at 115). The new tables will be used beginning in 2022. RMDs for 2020 were waived and the IRS delayed applicability of the new tables to give plan recordkeepers more time to make the administrative changes needed to implement the new tables.

Starting in 2022, savers who have reached their required beginning date will now use the updated life expectancy tables. For many clients, the new tables mean that RMDs will be slightly smaller beginning in 2022.