Uniform versus single life expectancy calculation

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L1: Uniform versus single life expectancy calculation
I have an existing SEPP started 2017. In 2018 i changed to RMD calculations. The uniform life expectancy calculator was used. Why? This is the calculation the accountant used. This year for 2019 i did the calculating myself to see the balance before visiting with this accountant for tax preparations. I used the single life expectancy table for my calculations. I am 60 years old. BD=1958,Sept. ( I know after more research I should have waited until I turned 59 1/2 to withdraw and would not be going through all this). Can you change from using the uniform to single life expectancy. I need to understand this because the accountant at the time had no idea what to do and this forum helped me. I know also with discussing SEPP with others (vanguard) at that time they had little knowledge. But they have educated themselves i guess because more people are doing this. The reason I need to know about the life expectancy issue because it changed the dollar amount i should withdrawal. Thank you
2019-01-06 18:57, By: Kathy, IP: []

L2: Uniform versus single life expectancy calculation
When you changed to the RMD method in 2018, you had the choice to use any of the 3 tables you wanted to. However, whatever table was selected must continue to be used for the RMD calculation for the remainder of the SEPP plan. This is clear from reading Notice 2002-62 posted on this site. You can read about the one time switch to RMD, but then you should refer to the RMD calculation requirements itself earlier in the Notice where it states that the table selected must be used for subsequent years.
For the 2018 switch, the selection of the Uniform table resulted in a smaller distribution amount than if the single life table had been selected. But you cannot change now to the single life table in 2019 or any later year.
One consolation is that if you need to bust the plan, the retroactive penalty owed will only apply to distributions you took prior to reaching 59.5. Distributions you have taken since 59.5 will never be penalized, but you need to complete the plan to prevent the earlier distributions from the retroactive penalty and interest.
2019-01-06 19:29, By: Alan S, IP: []

L3: Uniform versus single life expectancy calculation
I suggest that Kathy quantify her posting. If she tells us how much she has distributed to date, and if her needs are now less than originally set up. then she might find it cheaper to pay the penalty instead of higher taxes for the next 3 years if her taxable income now is higher than before, and she does need the extra money now.
If she is employed now, she might increase her 401-K or IRA contributions. If she is self-employed, then her taxes may be less now as a result of the new QBI 199-A 20% exclusion from income taxes.
2019-01-06 19:54, By: dlzallestaxes, IP: []

L3: Uniform versus single life expectancy calculation
Thank you. I am not employed. I am using this money to subsidize my husbands SS and his withdrawal (he is over 70 1/2). My next question is, why does the distribution factor remain the same. Last year the factor was 37.8 and its the same this year. This SEPP was set up with one of my IRAs. I have separate IRAs that are not connected to this SEPP.
Edited: I have to assume that the calculator on this site isn’t taking my entries for date of birth. I found the uniform life expectancy table on IRS Pub 590. And will deduct one factor point to 36.8 for my calculations. Thank you for your quick responses. And it does reduce the amount I can withdrawal.
2019-01-07 01:53, By: Kathy, IP: []

L4: Uniform versus single life expectancy calculation
I’ll ask you again more specifically:
1. What date did you start your SEPP 72-T ?
2. What was the balance in your IRA ?
3. How much did you take in distributions until you were 59 1/2 ?
4. How much did you take in distributions since you became 59 1/2 ?
The reason for these questions is that you might be better off busting your plan, and paying the 10% penalty. This might give you a better chance to do some tax planning, without being locked in to a 5-year SEPP 72-T.
2019-01-07 06:09, By: dlzallestaxes, IP: []

L4: Uniform versus single life expectancy calculation
The calculator uses your age as of 12/31 of any year – for SEPP purposes, that is your attained age.
>>And will deduct one factor point to 36.8 for my calculations
Wrong… for minimum distribution calculations, you must go back to the table each year and get the factor for your age as of 12/31 of that year,
2019-01-07 15:35, By: Gfw, IP: []

L5: Uniform versus single life expectancy calculation
As Gfw indicated, you must re enter the Uniform Table each year using your current age as of 12/31 of that year. While there is no automatic 1.0 reduction, it so happens that the divisor for age 61 is 35.8 which is 1.0 less than for age 60. The Uniform table published in most places including Pub 590 B starts at age 70. The Appendix to RR 2002-62 contains a Uniform table including ages below 70. For 2020-2022 the divisors are 34.9, 33.9, and 33.0 respectively.
The Uniform table produces life expectancies based on the joint life expectancy of you and a beneficiary 10 years younger than you. If the joint and survivor table would have been used the joint life expectancy would have been based on your age and the age of your actual named beneficiary on this IRA account.
2019-01-07 16:31, By: Alan S, IP: []