What Age To Use when figuring out RMD

[welkin]

Jurisdiction

US Federal Law

I reached age 72 in June 2022. The banks and brokerages are using the divisor of 27.4 to figure out my RMD. That divisor appears to be age 70. I was not 70.5 before January 1, 2020. The divisor for age 72 is 25.6.

Is this a mistake or is there something I don't understand about calculating the RMD?

If the divisor is correct then what divisor gets used for 2023 MRD?

Thanks

 

[Tax Counsel]

I reached age 72 in June 2022. The banks and brokerages are using the divisor of 27.4 to figure out my RMD. That divisor appears to be age 70. I was not 70.5 before January 1, 2020. The divisor for age 72 is 25.6.

The financial institutions are doing it correctly. The IRS and Treasury issued regulations last year that update the life expectancy tables. If you are using Table III for an owner of an IRA then for someone age 72 the factor is now 27.4, not 25.6. You'll see that reflected in the 2021 IRS Publication 590-B (and that table is the same as for the draft publication for 2022).

 

[welkin]

That clears it up. Thank you.