Author Topic: How did the IRS determine RMD rates?  (Read 453 times)

Ladychips

  • Pencil Stache
  • ****
  • Posts: 606
How did the IRS determine RMD rates?
« on: November 08, 2019, 10:45:52 AM »
So I recently asked a question about how one would know when one could spend more money in retirement (upping the 4% SWR) so that one didn't die with ALL the money.  Interesting answers which led to more questions.

I started wondering about RMD rates.  I know the rates are based on life expectancy.  And I know they are because the IRS wants their tax money.  But I also know that they don't want 'old' people to run out of money.  So they had to set the rates so that didn't happen.  What I'm curious about is how they decided the rates they selected would work?  Did they just work backwards from the end of life?  And the safety is that the RMD is ciphered on last year's balance and not the original balance....and that accounts for any drops in the market?

I googled...but didn't find anything that talked about the history/specifics of the RMD...just that it existed.

Anyone know?  Have sources they could point me to?  Do other people wonder about stuff???

MDM

  • Senior Mustachian
  • ********
  • Posts: 10352
Re: How did the IRS determine RMD rates?
« Reply #1 on: November 08, 2019, 11:25:39 AM »

Ladychips

  • Pencil Stache
  • ****
  • Posts: 606
Re: How did the IRS determine RMD rates?
« Reply #2 on: November 08, 2019, 07:01:48 PM »