(ConservativeInsider.org) – The Internal Revenue Service (IRS) rarely updates its life expectancy tables. In fact, the last time it did so was in 2002. However, the federal agency finally updated them this year, bumping the average life expectancy of a retiree up two years. This will have quite an impact on how much someone can withdraw from their retirement account.
A Required Minimum Distribution, or RMD, is the amount a retiree must take out from their retirement account every year. As the IRS now expects Americans to live two years longer, they increased the RMD factor, meaning retirees can take less out of their retirement accounts if they so desire. In turn, this money can continue to accrue interest in order to help the retirement account stay robust.
Baird, a private wealth management firm, shared more about how this affects citizens on Twitter:
After 20 years, the IRS has updated its life expectancy tables – which means the Required Minimum Distribution (RMD) you’ll need to take from your retirement account each year is also changing. Here’s what you need to know. https://t.co/11VTDU0NOg
— Baird (@rwbaird) April 14, 2022
While most retirees begin taking from their accounts when they turn 70.5, the IRS’ changes now allow for someone whose birthday falls on July 19, 2019, or later, to wait until they are 72 to begin withdrawals. These rules apply to IRAs, 401(k)s, and other retirement plans except for ROTH IRAs.
While managing one’s finances and wealth can be tricky, it’s vital to understand these changes to secure your future and how they impact the availability of retirement funds.
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