The various tables used to compute required minimum distributions from retirement plans have been updated, taking effect beginning in 2022, as the IRS has issued revised regulations under IRC §401(a)(9).[1]

In August 2018, Executive Order 13847, 83 FR 45321, directed the IRS to review the life expectancy and distribution tables to determine if they should be updated to reflect current mortality data, and how often such tables should be updated.  In November 2019 the IRS released proposed regulations containing proposed updated tables.

Longer Life Expectancy Tables

In the preamble to the final regulations, the IRS provides the following description of the changes that were made:

The life expectancy tables and applicable distribution period tables in these regulations generally reflect longer life expectancies than the tables in formerly applicable §1.401(a)(9)-9. For example, a 72-year-old IRA owner who applied the Uniform Lifetime Table under formerly applicable §1.401(a)(9)-9 to calculate required minimum distributions used a life expectancy of 25.6 years. Applying the Uniform Lifetime Table set forth in these regulations, a 72-year-old IRA owner will use a life expectancy of 27.4 years to calculate required minimum distributions. As another example, a 75-year-old surviving spouse who is the employee’s sole beneficiary and applied the Single Life Table under formerly applicable §1.401(a)(9)-9 to compute required minimum distributions used a life expectancy of 13.4 years. Under these regulations, a 75-year-old surviving spouse will use a life expectancy of 14.8 years. The effect of these changes is to reduce required minimum distributions generally, which will allow participants to retain larger amounts in their retirement plans to account for the possibility they may live longer.[2]

The updated Uniform Lifetime Table,[3] used to calculate the required minimum distributions, is provided below:

This table is described by the IRS as follows in the preamble to the regulations:

The Uniform Lifetime Table in these regulations sets forth joint and last survivor life expectancies for each age beginning with age 72, based on a hypothetical beneficiary. Pursuant to §1.401(a)(9)-5, Q&A-4(a), the Uniform Lifetime Table is used for determining the distribution period for lifetime distributions to an employee in situations in which the employee’s surviving spouse either is not the sole designated beneficiary or is the sole designated beneficiary but is not more than 10 years younger than the employee. The joint and last survivor life expectancy of an employee is taken from the Joint and Last Survivor Table using a hypothetical beneficiary who is assumed to be 10 years younger than the employee.[4]

In a footnote, the IRS reminds readers why the revised table starts at age 72 rather than 70:

The proposed regulations included Uniform Lifetime Table entries beginning with age 70. These regulations do not include Uniform Lifetime Table entries for ages 70 and 71 because section 114 of the SECURE Act changed the minimum age for receiving required minimum distributions from age 70½ to age 72.[5]

The regulation also provides updates to the following tables:

• Single life table;[6]

• Joint and last survivor life table;[7] and

• Mortality rates table.[8]

Upcoming Ruling on Substantially Equal Periodic Payments

The preamble notes that the agency will be issuing a ruling on applying these new provisions to substantially equal periodic payments:

The Treasury Department and the IRS anticipate issuing guidance that would update Rev. Rul. 2002-62. This update would apply the life expectancy, distribution period, and mortality tables set forth in these regulations for purposes of determining substantially equal periodic payments once these regulations become effective.[9]

Applicability Dates

The regulations provide details on how and when the new regulations will apply to distributions:

The life expectancy tables and Uniform Lifetime Table set forth in this section apply for distribution calendar years beginning on or after January 1, 2022. For life expectancy tables and the Uniform Lifetime Table applicable for earlier distribution calendar years, see §1.401(a)(9)-9, as set forth in 26 CFR part 1 revised as of April 1, 2020 (formerly applicable §1.401(a)(9)-9).[10]

The regulations contain additional guidance on the use of these tables for life expectancies that may be recalculated:

If an employee died before January 1, 2022, and, under the rules of §1.401(a)(9)-5, the distribution period that applies for a calendar year following the calendar year of the employee’s death is equal to a single life expectancy calculated as of the calendar year of the employee’s death (or, if applicable, the following calendar year), reduced by 1 for each subsequent year, then that life expectancy is reset as provided in paragraph (f)(2)(ii) of this section.[11]

The redetermination under this provision is to be handled via these rules

With respect to a life expectancy described in paragraph (f)(2)(i) of this section, the distribution period that applies for a distribution calendar year beginning on or after January 1, 2022, is determined by using the Single Life Table in paragraph (b) of this section to determine the initial life expectancy for the age of the relevant individual in the relevant calendar year and then reducing the resulting distribution period by 1 for each subsequent year. However, see section 401(a)(9)(H)(ii) and (iii) for rules limiting the availability of a life expectancy distribution period.[12]

The regulation provides the following example of applying this rule:

Example, Reg. §1.409(a)(9)-9(f)(2)(ii)(B), Redetermination

Assume that an employee died at age 80 in 2019 and the employee’s designated beneficiary (who was not the employee’s spouse) was age 75 in the year of the employee’s death. For 2020, the distribution period that would have applied for the beneficiary was 12.7 years (the period applicable for a 76- year-old under the Single Life Table in formerly applicable §1.401(a)(9)-9), and for 2021, it would have been 11.7 years (the original distribution period, reduced by 1 year). For 2022, if the designated beneficiary is still alive, then the applicable distribution period would be 12.1 years (the 14.1-year life expectancy for a 76-year-old under the Single Life Table in paragraph (b) of this section, reduced by 2 years). However, see section 401(a)(9)(H)(iii) for rules regarding how to apply the required distribution rules to defined contribution plans if the eligible designated beneficiary dies prior to distribution of the employee’s entire interest.

The regulation provides for the following if the employee’s sole beneficiary was the employee’s surviving spouse:

Similarly, if an employee’s sole beneficiary is the employee’s surviving spouse, and the spouse dies before January 1, 2022, then the spouse’s life expectancy for the calendar year of the spouse’s death (which is used to determine the applicable distribution period for later years) is reset as provided in paragraph (f)(2)(ii) of this section.[13]

The proposed regulations originally would have had these regulations apply for 2021—so why do the final regulations push this liberalization back to 2022?  The IRS explains this change in the effective date in the preamble:

A number of commenters also requested that the effective date of the final regulations be delayed to 2022 (instead of 2021). They noted that plan sponsors and IRA providers are currently working to update their systems for the SECURE Act changes to section 401(a)(9) and recommended that the effective date of these regulations be delayed in order to allow administrators sufficient additional time to update systems for these regulations. As described in the Effective/Applicability Date section of this preamble, these regulations will apply to distribution calendar years beginning on or after January 1, 2022.[14]

[1] TD 9930, November 5, 2020, https://public-inspection.federalregister.gov/2020-24723.pdf (retrieved November 6, 2020)

[2] TD 9930, Summary of Comments and Explanation of Provisions, I. Overiew

[3] Reg. §1.401(a)(9)-9(c)

[4] TD 9930, Summary of Comments and Explanation of Provisions, III. Updated Life Expectancy and Distribution Period Tables

[5] TD 9930, Summary of Comments and Explanation of Provisions, III. Updated Life Expectancy and Distribution Period Tables, Footnote 14

[6] Reg. §1.409(a)(9)-9(b)

[7] Reg. §1.409(a)(9)-9(d)

[8] Reg. §1.409(a)(9)-9(e)

[9] [9] TD 9930, Summary of Comments and Explanation of Provisions, V. Use of Revised Tables to Determine Substantially Equal Periodic Payments

[10] Reg. §1.409(a)(9)-9(f)(1)

[11] Reg. §1.409(a)(9)-9(f)(2)(i)

[12] Reg. §1.409(a)(9)-9(f)(2)(ii)(A)

[13] Reg. §1.409(a)(9)-9(f)(2)(i)

[14] TD 9930, SUPPLEMENTARY INFORMATION, Background, II. Regulations under Section 401(a)(9)