annuity method and life expectancy

L1: annuity method and life expectancyAs I understand it when you use the annuity calculation method you can use any reasonable life expectancy assumption. Using google I found http://www.cdc.gov/nchs/fastats/lifexpec.htm which says at age 54 I can expect 26.4 more years. I also found http://www.efmoody.com/estate/lifeexpectancy.htmlwhich stated that I could anticipate 23.5 years as a male age 54. Both of these answers are based on Federal Gov’t reports. Since these are lower figures than the defaults in your calculator how can I use them? They should generate a higher monthly SEPP which I would prefer and still not bust the plan before I am 59 1/2. 2002-05-11 11:51, By: freeatlast, IP: [127.0.0.1]
L2: annuity method and life expectancyIn simple terms, you can’t.You would have to start with the basic mortality table lx factors and then calculate life expectancy based on mortality and interest assumptions. Beware, not all tables are created equal – if you venture outside of the tables that have been previously used, then you should also think about getting your on PLR right after you get you own actuary to do the calculations.If you look at our life expectancy calculator you’ll find tables not included in the 72t calculator. There are tables that have even shorter life expectancies, but I wouldn’t use them. 2002-05-11 12:31, By: Gfw, IP: [127.0.0.1]

L2: annuity method and life expectancyActually, the IRS has approved 9 different mortality tables; therefore by implication all other mortality are NOT approved. Does that make the other unapproved tables “unreasonable”? The answer is uncertain; so why even go there. Of the nine approved, UP-1984 is the most aggressive; meaning people die the quickest therefore giving you lowest annuitant divisors of all approved tables for the same age/interest rate. Therefore, just about everyone uses UP-1984. Generally, no one uses anything else, not becuase you can’t, but becuase it just isn’t worth the effort to get another table approved. TheBadgerwjstecker@wispertel.net2002-05-11 18:53, By: TheBadger, IP: [127.0.0.1]

L2: annuity method and life expectancyFinally I understand. The summary after I completed using the 72T calculator lists 29.5 years regardless of the table chosen but I gather it does this as indicated in the 5/5/2002 answer because it is referring to only methods 1 & 2. Possibly others would not be confused if there was a line before # 3 and a line “using life expectancy chosen”. Anyway when I complete the sample form I will now attach to it both a print out of the calculation page where UP1984 is entered and a copy of the page from the minimum distribution area on life expectancy that lists “UP1984″that at 54 I only have 23.5 years to anticipate [thank heavens for long lived genes that I hope to beat those odds]. Similarly confused individuals could easily not fill out the sample form and not realize that the figure in the calculator summary is not the one to put sample form for life expectancy. I really love this site and only make these suggestions in an effort to make it even more useful to other laypersons in this dilemma.2002-05-12 10:46, By: freeatlast, IP: [127.0.0.1]

L2: annuity method and life expectancyWhen you select the annuity (#3) method, forget about the life expectancy factor – use the calculated payment for the annuity (#3) methodThe life expectancy factor means nothing. 2002-05-12 10:53, By: Gfw, IP: [127.0.0.1]

L2: annuity method and life expectancyRegarding the mortality table and methods 1-3, this statement is from our FAQ Section.Q. Which Mortality Tables can be used? A. Notice 89-25 used the term “reasonable mortality table” in outlining the third alternative used in the description of substantially equal payments. In its calculations, the IRS used the UP-1984 table. The 1983(a) tables is used to determine life expectancies in methods number one and number two so it should also be usable in method number three. Recently the IRS replaced the 80CSMT table with the 90CM table which should also be considered reasonable. Make sure that you read everything!2002-05-12 16:50, By: Gfw, IP: [127.0.0.1]