You must begin taking RMDs in the year after the year of death, using your age and the IRS Single
Life Expectancy Table for RMD calculations.
As a non-spouse beneficiary, you must directly roll over the inherited assets to an Inherited IRA in your own name and use your own age and the IRS
Single Life Expectancy Table for calculating the first year RMD.
However, if your spouse is the only primary beneficiary and he or she is 10 years younger than you, your life expectancy factor is taken from the IRS
Joint Life Expectancy Table (PDF).
If you choose to roll over the assets into your own IRA, you would base the timing and calculation on your own age using the IRS
Uniform Life Expectancy Table (PDF).
Under the required minimum distribution method, the annual payment for each year is determined by dividing the account balance for that year by the number from the
chosen life expectancy table for that year.
It is important to understand that there is more than one formula for taking the distribution so make sure you are choosing the
correct life expectancy table, as there are three to choose from.
The result is that retirees who transfer their tax - deferred savings into an income fund at 71 today will see their nest - egg cut in half by age 80 and will be down to 10 per cent by age 94,
when life expectancy tables say they will live an additional four years on average.
You will take your account value as of December 31 of your IRA and you will divide it by your life expectancy using one of the three
life expectancy tables provided by the IRS.
With an Inherited IRA, the amount of your required minimum distributions (RMDs) will be based on your age and will be recalculated each year based on the factors in the IRS
Single Life Expectancy Table.
However, if your spouse is the only primary beneficiary and he or she is 10 years younger than you, your life expectancy factor is taken from the IRS
Joint Life Expectancy Table (PDF).
This basically allows you to access your money without penalty at any time before 59 1/2 provided you withdraw the assets according to a specific schedule,
using life expectancy tables, for at least 5 years or until hitting 59 1/2, without drastically deviating from the schedule.
For your reference, the first twenty years (covering distributions for ages 70 - 90) of the most commonly used table, the
Uniform Life Expectancy table, is listed at the bottom of this article.
With this method, the account balance, the number from the
chosen life expectancy table and the resulting annual payments are redetermined for each year.
Your RMD is calculated by dividing your account balance at the end of the previous year by the appropriate life expectancy divisor, based on your age as of 12/31, from
IRS Life Expectancy Tables.
IRS rules and
life expectancy tables are used for this example.
The required minimum distribution amount depends on the size of your traditional IRA and your expected distribution period, as determined by the IRS
life expectancy tables.
The balance is then divided by the life expectancy factor from either the Single
Life Expectancy table or the Joint Life and Last Survivor Expectancy table, using the age (s) you have reached (or will reach) by the end of the current calendar year.
Using substantially equal monthly payments based on the IRS
life expectancy table, the individual received $ 1,194.74 a month at age 57; $ 1,985.93 a month at age 69; $ 1,280.21 per month at age 70, when the payments shift to required minimum distributions; and ended up with $ 2,692.04 a month at age 90.
With this balance you then create an amortization schedule over a specified number of years equal to your life expectancy factor from either the Single
Life Expectancy table or the Joint Life and Last Survivor Expectancy table, using the age (s) you have reached (or will reach) for that calendar year.
They are: 1) substantially equal monthly payments following the IRS
life expectancy table; and 2) a life annuity with increasing payments.
His argument for the annuity choice is that the time horizon is known and highly predictable due to
life expectancy tables and transfer of risk nature of the strategy.
Life expectancy tables haven't been adjusted for a while, and I think that potential change is as much of a risk to the consumer as perceived low interest rates.
You use one of three different IRS
life expectancy tables, depending on your financial situation.
If you choose to transfer the assets to an Inherited IRA, the amount of your RMDs will be based on your age and be recalculated each year based on the factors in the IRS Single
Life Expectancy Table.
You can do the amortization with the same methodology where you will take
the life expectancy tables, divide that into the December 31 IRA account value.
This is your RMD, and it is calculated based on your account balance and IRS
life expectancy tables.
To calculate your RMDs, simply divide the value of each retirement account balance by the distribution period in the IRS
life expectancy table.
Finally, account owners must begin making at least required minimum withdrawals, which are set by the IRS using
a life expectancy table, when the account owner turns 70 1/2, unless he or she is still employed.
2002 - 62 § 2.02 (a)(
life expectancy tables).