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Final regulations for required minimum distributions include important changes

The IRS issued final regulations for required minimum distributions from IRAs and qualified retirement plans, other than annuity-type plans. (TD 9930, scheduled for publication on November 12, 2020.)

Here’s a link to the final regulations.

The final regulations supercede proposed regulations issued on November 8, 2019 (REG0132219-18) and include important changes from the proposed regulations.

Most significantly, the final regulations are effective for required minimum distributions for tax years after 2021. Under the proposed regulations, the new rules would be effective for tax years after 2020.

The principal purpose of the regulations is to issue new life expectancy tables used to compute required minimum distributions for IRAs and qualified retirement plans. Since the tables reflect longer life expectancies, the required minimum distributions will be smaller under the final regulations. The life expectancy tables included with the final regulations are slightly different from those issued with the proposed regulations.

There is no penalty for taking bigger distributions than the required amount. A retirement account will last longer if only the required amounts are distributed.

The administrator for the account will usually compute the required minimum distribution and notify the account owner of the amount. The computed amount might be in error if the account owner died and the administrator hasn’t been notified.

Tax and financial advice from the Silicon Valley expert.