Life expectancy tables

 Here is a rare bit of good news from the IRS: Retirees may have smaller required minimum distributions for 2022, thanks to a change in the federal agency’s life expectancy tables. RMDs — which apply to certain types of retirement accounts — are mandatory annual withdrawals that retirees make beginning in the year when they turn 72. The amount you must withdraw each year is generally determined by dividing the previous year-end balance of each qualifying account by a ‘life expectancy factor’ as defined by the IRS. That life expectancy factor comes from IRS charts that are often referred to as life expectancy tables. Recently, these tables were updated to account for longer lifespans, with the changes affecting RMDs for 2022 and later. In the old tables, life expectancy at birth was 82.4 years. The updated tables bump that up to 84.6 years. These are the first updates to the life expectancy tables in two decades. The updates mean RMDs now are expected to be spread out over a longer period. As a result, each annual RMD withdrawal will be slightly reduced — which is good news for retirees’ taxes. RMDs generally are taxable income. So, smaller RMDs mean potentially lower taxes for retirees. If you are looking for this information, an easier but informal way to get an idea of the amount of a particular RMD withdrawal is to use an RMD calculator like the one offered by the U.S. Securities and Exchange Commission’s Investor.gov website.