Great News! Your 2022 RMD Might Be Lower This Year

Maura Schauss |

Nina L. Falci, Client Operations Coordinator

There’s some good news in the world of Required Minimum Distributions (RMDs)!

Effective January 1st, the IRS updated the life expectancy tables to reflect the fact people are living longer.  This may result in a lowering of the factor used in the RMD calculation, which in turn, might lower the amount of your RMD and your corresponding tax liability. The good news is, of course, taking less money out of your account means more remains in your account to stay invested.

Who is Affected?

If you have assets in an inherited IRA account, or if you are over age 72 and have assets in one or more retirement accounts*, you must take Required Minimum Distributions (RMDs) from your accounts each year.

How Are RMDs Calculated?

Essentially, your December 31st account balance is divided by a factor taken from the appropriate IRS life expectancy table. The result is the RMD amount which needs to be disbursed to you no later than December 31st of the new year.

These taxable distributions are calculated using the following variables:

  • Age
  • Marital status
  • The balance in your account as of December 31st of the previous year
  • Life expectancy tables created by the IRS

Some Simple Examples

Here are two simple examples that demonstrate the lower RMD as a result of the 2022 IRS life expectancy table change.

Scenario 1 – Married, 74 year-old

  • IRA account balance:  $200,000 as of Dec. 31, 2021
  • RMD 2022 (old factor): $8,403.36
  • RMD 2022 (new factor): $8,130.08

Scenario 2** – Single, 33 year-old with an Inherited IRA

  • Inherited IRA account balance: $200,000 as of Dec. 31, 2021
  • RMD 2022 (old factor): $3,984.06
  • RMD 2022 (new factor): $3,906.25

Please note that your situation might result in an RMD which is the same as, or larger than in previous years, depending on the performance of your investments.

For a more detailed view covering the application and calculation of RMDs, visit Retirement Topics on the IRS website

Here to Support Your Financial Goals

For more details regarding how these new tables could affect your RMD situation in 2022 and future years, please contact us at 703.584.2700, email clientservices@washingtonwealthadv.com or book some time with your WWA advisor

 

* IRA, SEP, SIMPLE, 401(k), 403(b), 457, profit sharing plans 

** Inherited IRAs can have different RMD rules. They are not always based on life expectancy. 

 

IMPORTANT WASHINGTON WEALTH ADVISORS DISCLOSURE INFORMATION.  

ABOUT WASHINGTON WEALTH ADVISORS

Washington Wealth Advisors is a fee-only registered investment advisory firm serving busy families, executives, women building wealth, and small business owners. We provide Wealth Advisory Services—financial planning coupled with asset management—guided by a personalized investment strategy based on each client’s unique goals. Our unbiased advice, independent approach, and proactive investment management help to support our clients’ overall financial peace of mind.