life expectancy tables
L1: life expectancy tablesI will be implementing a 72t SEPP plan this year and I have a question about the proper use of the life expectancy tables. I will be 53 by year end, and my beneficiary wife will be 54 and beneficiary son will be 26. Can I use either 57.9 (53 and 26) or 37.1 (53 and 54) from the joint and last survivor table? I’ve reread the example in Section 2.02(b) of RR 2002-62 about a dozen times and I’m confused. Further confusion comes from the subtitle to the joint table in IRS Pub. 590, which states, For Use by Owners Whose Spouses Are More Than 10 Years Younger and Are the Sole Beneficiaries of Their IRAsÛ.
I realize I can also select 31.4 as my life expectancy from the Single Life Table.2011-04-08 15:12, By: Jim, IP: [188.8.131.52]
L2: life expectancy tablesDon’t make is complicated, start by reading all of our planning pointers http://72t.net/72t/Planning/Pointersbut especially… When using the calculators start with Single Life table and the maximum interest rate allowed. If the single life calculations (Use Joint Calculations=No) produce a higher than desired payment, consider breaking the IRA into multiple accounts using only one of the accounts to produce the desired SEPP payment. Other accounts can be used for emergencies or for establishing another SEPP at a later date. 2011-04-08 15:26, By: Gfw, IP: [184.108.40.206]
L3: life expectancy tablesI believe that the tables you refer to were basically to be used for Required Minimum Distributions when taxpayers reached 70 1/2.
They were then expanded to include Inherited IRAs, which obviously could involve beneficiaries considerably younger than 70 1/2.
I think that SEPP 72-T may have even started after Required Minimum Distributions, and that the IRS just decided to use the same tables to minimize confusion with too many tables.
Anyway, the main point is that we usually use the Single Life tables, unless some circumstance require us to use the joint life table.2011-04-08 16:06, By: dlzallestaxes, IP: [220.127.116.11]
L3: life expectancy tablesThanks, I can see the forest now.2011-04-08 16:50, By: Jim, IP: [18.104.22.168]
L4: life expectancy tablesI think we all agree that there is no reason to consider a table other than the single life table for SEPP plans since that table will always produce the highest distribution per dollar of account balance.Further, there are increased possiblity for errors using the other table options because the beneficiary used must be the one named as beneficiary on Jan 1st of the distribution year. However, with respect to your first post, note that Table II in Pub 590 requires the sole IRA beneficiary to be a spouse more than 10 years younger. But for SEPP purposes, this table can be used whoever is your beneficiary as long as it is an individual person. With the RMD method, you must do an annual recalculation anyway, but you could conceivably change beneficiaries and affect the annual distribution if you wanted to. All of this just gives further credibility to simply using the single life table and the highest possible interest rate.2011-04-08 18:47, By: Alan S., IP: [22.214.171.124]