Joint table for 72T calculations

L1: Joint table for 72T calculations Hi Gfw;
Thank you for the response on my previous questions.
I still don”t know how to use mortality table to get joint 72T annual distributions. This table does not contain beneficiary ages.
In my alternative approach, I tried to use single and joint life expectancy tables to get 72T annual distributions for the annuitization method. The results are a bit off. For example, for the age of 51,8%,$50,000, I got $4,332 while your calculator and others produce $4,175.
I used the general equation of present value of ordinary annuity:
PV = FV * [1/(1 + i)^n)
where
PV= present value
FV= future value
i= periodic interest rate (annual interest rate difided by m);
n=number of periods (umber of years N times m);
m=frequency of receipt or payment of the future value.
N= number of years (derived from life expectancy tables and can be real).
My questions are:
1. Could you please give an example of how to calculate joint 72T annual distributions for the annuitization method based on mortality table directly?
2. Is my approach of using the above equation and life expectancy tables correct?
3.Can I use it for the clients even if results are not exactly the same as the results produced by the mortality table?
4. If my approach is not good could you please provide me with the example of how to calculate single and joint 72T annual distributions for the annuitization method based on life expectancy tables?
I realize that my questions will probably require lot of time to answer, but I really need some sort of help on this matter.
Thank you for your help and time.

Vlad

2003-01-15 09:03, By: Vlad, IP: [127.0.0.1]

L2: Joint table for 72T calculations Hello Vlad:
I am going to jump in, ever so quickly, to potentially short-cut this whole issue for you:
1. The @PV function will come close but is inaccurate becuase the underlying mortality table is not linear; it is curvalinear as deaths per 1000 accelerate in later years. If you are absolutely set on using the annuitization method, either Gfw or I can send you a sample annuitization divisor table.
2. Starting 1/1/03, the annuitization method ALWAYS produces a smaller annual distribution than the amortization method becuase both methods are forced to use the same mortality table (this was not the case pre-1/1/03). As a result, I suggest dumping the annuitization method entirely and simply using the amortization method (@PMT(P,I,T)) to arrive at a maximum annual distribution for a client. If some distribution amount less than the maximum is desired; there are better ways to do it: using a lesser interest rate or fracturing the corpus ofthe IRA.
TheBadger
wjstecker@wispertel.net
2003-01-15 09:25, By: TheBadger, IP: [127.0.0.1]

L2: Joint table for 72T calculations Is close ok? I wouldn”t use close with my clients.
I will suggest that for the formulas that convert the mortality table to life expectancy factors you should contact an actuary (which is what I originally did)who can work with you to get the exact numbers. The error thatyou are making on the amortization method (which will produce close results at low interest ratesand a larger difference at higher interest rates)is a common error that can be found on a variety of web calculators.
Please feel free to use our calculators as a reference, they do match the IRS calculations for both Notice 89-25 and Rev.Rul. 2002-62

2003-01-15 10:21, By: Gfw, IP: [127.0.0.1]