The IRS has recently updated the tables it uses to determine the size of the Required Minimum Distributions (RMDs) that need to be withdrawn from IRA or 401(k) accounts each year, based on increases in the average lifespan.
Individuals who have contributed to qualified retirement accounts are required to begin taking distributions after reaching age 73 if they were born between 1951 and 1959. (Individuals born between July 1, 1949 and December 31, 1950 were required to begin taking the distributions at age 72 – 1/2; those born before that date were required to begin taking their distributions after reaching age 70-1/2). Individuals born in 1960 or later do not need to begin taking distributions until age 75.
For individuals who need to look to Medicaid to assist with the cost of Long Term Care, many states will not count the principal value of a qualified retirement account as a resource for that person if he or she is receiving a distribution of at least the RMD. A reduction in that RMD would reduce the amount of countable income that person has, which may also affect eligibility for Medicaid. Individuals concerned about the impact of their retirement accounts on eligibility for Medicaid long term care benefits should consult an elder law attorney in the state in which they reside.
More information about the new tables and RMDs in general is available at www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds.