What Life Expectancy Table Should I Use?
By Beverly DeVeny, Chief IRA Analyst
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IRS does not have a crystal ball. Its team members don’t know how long you are going to live. The life expectancy tables are based on statistics and do not take into account any of your personal information. A 70 year old who is in good health, and is calculating his first required minimum distribution (RMD), has the same life expectancy as his next-door neighbor who has a terminal illness and is on hospice care.
The tables that are currently in use were adopted in 2002 and have not since been updated. They can be updated at the discretion of IRS or when Congress mandates an update. The last time Congress mandated an update was in – you guessed it – 2002.
There are three tables; the Uniform Lifetime Table, the Single Life Expectancy Table, and the Joint Life Expectancy Table. You can find these tables on our website or on the IRS website, www.irs.gov. The Joint Life Expectancy Table is many, many pages; the other two tables are single page charts.
Uniform Lifetime Table – most account owners only
This table is used by IRA and employer plan account owners only. The individual looks up the age they will be on their birthday that year to get the factor to use for that year’s calculation. You go back to the table each year to get the current life expectancy factor. The factor is based on the owner’s age and a hypothetical beneficiary that is 10 years younger. Each year that you live extends your life expectancy out a little further, up to a maximum of age 115.
Joint Life Expectancy Table – account owners with a spouse more than 10 years younger
This table is the exception to the Uniform Lifetime Table. In order to use this table, the account owner’s spouse must be the sole primary beneficiary of the IRA or plan and must be more than 10 years younger than the account owner.
As with the Uniform Lifetime Table, you use the age that is attained in the current year, but you use the ages for both spouses. The table is a grid. You find the spot where the two ages intersect to get the factor for the year. You go back to this table each year to get the current year’s factor. Each year that you live extends your life expectancy out a little further, up to a maximum of age 115.
Single Life Table – beneficiaries only
This table is used only once by non-spouse designated beneficiaries. A designated beneficiary is one that is either named on the beneficiary form by the account owner or is named by the default language in the IRA or plan document. Usually, the non-spouse beneficiary looks up the age they will be on their birthday in the year after the death of the account owner to get their life expectancy factor. In each subsequent year, they will subtract one from that factor to get the factor for the current year.
Unlike the other two tables, the initial factor that you get in the first year is the payout period for the inherited IRA. If you are age 63 in the year of your first payout you will have a factor of 22.7. The IRA will pay out over 22.7 years, and the IRA balance will be zero at the end of that time.
Both spouse beneficiaries and non-designated beneficiaries, such as an estate, will also use this table but they have very different rules. We will cover those in a future post.