Header Section


IRA Distribution Tables: Fact or Fiction

The IRA distribution tables can be confounding to the average retiree. What table should I be using? How do I calculate my RMD (required minimum distribution)? We look at several different scenarios and provide the facts and common misconceptions involving the IRA distribution tables.

There is one table that everyone uses to determine RMDs.
A: Fiction. There are actually three different life expectancy tables that are used to determine RMDs, depending on your situation; the uniform lifetime table, the joint lifetime table and the single life table.

IRA distribution tables required distributions ed slottAll IRA owners must use the uniform lifetime table to determine RMDs.
A: Fiction. Most IRA owners will use the uniform lifetime table to determine the RMDs for their own IRAs, but if your spouse is your sole beneficiary for the entire year and he or she is more than 10 years younger than you, you can use the joint lifetime table to determine RMDs.

All IRA beneficiaries must use the single life table to determine RMDs.
A: Fact. This one trips up a lot of people. I’ve even seen major custodians who have calculated RMDs for clients incorrectly because they didn’t use the single life table to determine RMDs for a spousal beneficiary. To be clear, ALL beneficiaries use the single life table to determine RMDs on inherited IRA accounts. There are some special rules for certain spousal beneficiaries, such as the ability to “recalculate” each year, but even the special rules call for the use of the single life table.

IRS adjusts the life expectancy tables each year to keep pace with longer life expectancies.
A: Fiction. IRS can adjust the life expectancy tables from time to time, but they certainly don’t do so on a regular basis. In fact, it’s been roughly a decade since they were last updated.

All IRA owners and beneficiaries determine RMDs using the same life expectancy factors, regardless of their “real” life expectancy.
A: Fact. Your actual life expectancy has no bearing on how you calculate RMDs. For instance, a 40- year-old beneficiary has a life expectancy of 43.6 years on the single life table. That means that a 40- year-old-marathon runner in perfect health and great longevity genes uses 43.6 as their RMD factor. It also means that a 40-year-old diagnosed with a terminal illness uses the same factor. Age is all that matters to determine your life expectancy in the eyes of IRS.

Using the wrong life expectancy table can create major tax problems.
A: Fact. Fact. Fact. Get the point. Using the wrong life expectancy table can create big problems for you. If you’re lucky, you calculate wrong and take out too much. You won’t face any penalties for that, but you’re giving up valuable tax deferral and paying tax before you have to. On the other hand, if you calculate an RMD too small, it could lead to a 50% penalty on any shortfall, as well as excess contribution penalties if the shortfall is rolled over. Other penalties could be enforced as well, so make sure you use the right life expectancy table and carefully calculate your RMD.


- By Jeffrey Levine and Jared Trexler

1 comments:

This explanation left me with several questions as a widow. I'm wondering,
1.If a spouse converts the inherited spousal IRA to their own, do they use the Uniform Lifetime Table and their own age to start the RMD?
2.If the spouse has their own IRA and an inherited spousal IRA do you use the two different tables to calculate the RMD of each?
3.Do you also use, when the spouse would have turned 70.5 years of age to determine when to start RMD withdrawals of the inherited IRA and their own age to determine when to start taking RMD from their own IRA?

Post a Comment

Mailbag