Kiplinger\'s Personal Finance 02.2020

02/2020 KIPLINGER’S PERSONAL FINANCE 17

The IRS has proposed new

life expectancy tables to

calculate RMDs, reports

the Kiplinger Retirement

Report. The new tables take

into account today’s longer

life expectancies. The cur-

rent tables stop at age 115+,

but the new ones run an

extra five years, to 120+.

What do the new tables

mean in practice? When

calculating RMDs under

the proposed rules, the

higher life expectancy

factors would mean a re-

tirement account owner

could take out a smaller

amount each year, leaving

more money to grow tax-

deferred in the account.

For example, for a retire-

ment account owner who

is age 71, the current life

expectancy factor is 26.5,

whereas the proposed rules

would set that factor at 28.2.

If that 71-year-old has a

$1 million IRA balance, he

would be required to take

out nearly $2,300 less.

The proposed regula-

tions must go through a

few more regulatory steps

before they can be final-

ized. If they stay on track,

the new rules would be

used to calculate RMDs

beginning in 2021.

A month after Charles Schwab

kicked off a zero-commission

price war, the discount broker

announced plans to acquire rival

TD Ameritrade in a deal worth

$26 billion. The deal makes stra-

tegic sense, and stocks of both

companies jumped on the news,

while shares of competitor

E*Trade sank. The combined

entity would hold about $5 tril-

lion of customer assets and

nearly 25 million accounts.

The marriage would create

a technological powerhouse,

which could “deliver a more

advanced, flexible solution to

a wide range of customers,”

according to Deutsche Bank

analysts. But “for small and mid-

size financial firms, the pressure

will be enormous to provide ade-

quate service and value,” says

Bankrate’s Mark Hamrick. Those

firms could lose market share,

“including in smaller communi-

ties, where more personal brick-

and-mortar financial services

are harder to come by,” he adds.

The deal could face some anti-

trust hurdles. Even if it goes

through, integration of the two

firms could be long and compli-

cated, with the potential for

customers to defect during the

process. On that front, investors

should be on the lookout for spe-

cial offers from rival brokerages.

A mere 9.8% of Americans changed residence

this year, the lowest total since the Census

Bureau started keeping track of annual mi-

gration statistics seven decades ago. Why?

Young people aren’t moving as often as in the

past. Before the Great Recession, in 2006,

29% of those age 20 to 24 reported moving

in the most recent year. This year, only 20%

did. Millennials, historically the most mobile

generation, face greater barriers to mobility,

such as higher housing costs. Even renters are

moving at significantly lower rates.

200 , 000

The number of Fidelity

401(k) plans with a bal-

ance of $1 million or more—

a record high —as of the

third quarter of 2019.

CITIES WHERE YOU’LL SIT

IN TRAFFIC THE LONGEST

Clever, a real estate company, ranked work commutes

for the 50 largest metro areas in the U.S. The annual cost

includes fuel, car maintenance and opportunity cost of

time spent commuting. (The five best metro areas for

commuting are New Orleans, Buffalo, Milwaukee, Okla-

homa City and Miami.)

CITY

TIME TO

WORK (min.)

ANNUAL

COST

WASHINGTON, D.C.^37 $12,

SAN JOSE 31 11,

SAN FRANCISCO^32 11,

NEW YORK CITY 35 10,

SEATTLE 31 10,

LIVE LONGER
AND PROSPER

TD AMERISCHWAB?

From The Kiplinger Letter

AMERICANS ARE MOVING LESS