Inherited IRA

Posts Tagged ‘life expectancy’

How to Determine the Life Expectancy Factor

The common ways to determine the Life Expectancy factor are discussed below:

Single, Recalculated Life Expectancy:

When the spouse IRA Beneficiary chooses this option, the life expectancy factor is determined annually using the spouse beneficiary’s age as of his or her birthday in each year for which the Required Death Distribution must be made and the surviving spouse is alive.

The spouse IRA Beneficiary refers back to the Single Life Expectancy Table each calendar year to obtain the new factor.

Single, Non-Recalculated (Term-Certain) Method:

A designated non-spouse IRA Beneficiary’s life expectancy is calculated using the age of the IRA Beneficiary in the year following the year of the IRA owner’s death, using the Single Life Expectancy Table.

The life expectancy factor is reduced by “one” for each subsequent year.

The designated IRA Beneficiary does not refer back to the Single Life Expectancy Table annually.

This method will also be used by remainder IRA beneficiaries. (see also: Stretch-Out IRA Option)

In the case of a non-living entity listed as a designated beneficiary

If the IRA owner dies after the Required Beginning Date, the life expectancy factor is calculated by using the deceased IRA owner’s remaining single life expectancy, non-recalculated (term-certain).

Locate the age of the IRA owner on his or her birthday in the year of death, using the Single Life Expectancy Table.

This factor will be reduced by “one” for each subsequent year.