Single Life Expect for Bene IRA…
Client’s date of death 12/1/2002(birthdate was 5/13/24) – beneficiary IRA established for Son directly at a mutual fund company, birthdate 11/9/1958..began Bene RMD in 2003 using the Single Life table with a factor of 38.8. Each year after we are reducing the life expectancy factor by 1 (ex. 2004 37.8, 2005 36.8 and so on). The mutual fund company the son has his bene IRA with follows the Single Life table and uses the divisor that is listed for the bene’s age for the year the RMD is to be distributed….they do not reduce by 1. Please confirm that our firm is or is not calculating the bene RMD correctly.
Permalink Submitted by Alan Spross on Tue, 2010-06-15 18:27
You are doing it correctly, the fund company is not.
The reduction of the divisor by 1.0 each year always applies to non spouse beneficiaries. This is known as “non recalculation” and it does not update the life expectancy due to the fact that the beneficiary lived another year.
Conversely, a sole surviving spouse beneficiary is given the benefit of “recalculation”, ie they are allowed to go to Table 1 for a new divisor each year. Perhaps the fund company is not distinguishing between the classes of beneficiaries.