Starting in 2022, updated life expectancy tables used to determine Required Minimum Distribution amounts that must be taken from retirement accounts will go into effect. These tables had not been updated in 20 years and reflect the increase in life expectancy that has occured over that time. As you can see in the below comparison, while the reduction is not large, it does add up over time and allows for the ability to have more money grow tax deferred for a longer period of time.

As an example of the impact of these changes, for a hypothetical 80 year old with $500,000 in an IRA, their Required Minimum Distribution would have been $26,737.97 ($500,000 / 18.7) using the old table and under the new guidelines their required amount would be $24,752.48 ($500,000 / 20.2) or a difference of $1,985.49.

The old tables remain in effect for this year but the new tables will become effective starting in 2022.

Feel free to download the comparison chart here.