The IRS has good news for retirees: you can now keep more money in your tax-deferred retirement accounts thanks to lower required minimum distributions (RMDs).

For the first time in 20 years, the Internal Revenue Service has updated its actuarial tables that dictate how much a person is required to withdraw from his or her retirement accounts starting at age 72. The new tables, which now project longer lifespans, are used to calculate RMDs from individual retirement accounts, 401(k)s and other retirement savings vehicles each year. For help with planning out RMDs and meeting your retirement income needs, consider working with a financial advisor.

What Are RMDs and How Are They Calculated?

One of the primary benefits of retirement accounts are the tax advantages they provide. Traditional IRAs and 401(k)s allow retirement savers to defer taxes until they withdraw money from their accounts. This allows the money to continue to grow at a faster rate over time. However, you can only defer taxes for so long. To limit you from keeping your money in a retirement account indefinitely, the IRS requires you to withdraw a specific amount each year once you reach a certain age.

Previously, you were required to start taking withdrawals from your IRA or employer-sponsored retirement plan when you reached age 70.5. But the 2019 SECURE Act made a critical change to when RMDs begin. If you reached age 70.5 in 2019 the prior rule applied and you had to take your first RMD by April 1, 2020. Yet if you reached age 70.5 in 2020 or later you must now take your first RMD by April 1 of the year after you reach 72.

People with the following accounts are subject to RMDs:

It's important to remember that Roth IRAs are not subject to RMDs.

Calculating your RMD is relatively easy. First, look up the market value of your retirement account as of Dec. 31 from the previous year. Then, divide that value by the distribution period figure that corresponds with your age on the IRS Uniform Lifetime Table.