Mortality Tables

L1: Mortality TablesPer the 2006 Pension Protection Act. The IRS would be developing new mortality tables.
The Administrator ofour company pension sent an email stating that new mortality tableswould affect thecalculation of my Lum Sum Pension in a positive manner.
How will newmortality tables affect the 72T calculation?

Thanks2007-09-27 19:11, By: destiny1, IP: [74.229.73.188]

L2: Mortality TablesHello Destiny:
I seem to have lost the IRC reference; however, my recollection is that the IRS is charged with developing new mortality tables every 10 years based upon the most recently completed census data; thus, the last tables issued were in 2002 based on the 2000 census. I would expect that the IRS would issue new ones in 2012 closely following the 2010 census.
In general, each table issued and I am recalling back to the mid-1980”s has caused life expectancies to rise, usually by 1/2 to 1 year each successive decade; e.g. current mortality tables create a life expectancy for a 55 year old of 29.6 years. When the next table is issued in 2012 or so I would expect that same 55 year old to have a new life expectancy of somewhere between 30 and 31 years.
All else being equal, as life expectancy rises, the annual distribution falls; however, in my example by only 3% or so; not a huge difference.
Admittedly, I have not read the Pension Protection Act of 2006 but your adminstrator is likely correct. If you are 55 now and have a current life expectancy of 29.6 years and new table comes out that says that you will now (on average) live another 31.6 years; it will require a marginally larger lump sum dollar amount to support those last two years.
TheBadger
wjstecker@wispertel.net
2007-09-27 19:37, By: TheBadger, IP: [72.42.66.36]