Inherited IRA calculation
Just a point of clarification – when taking annual rmd’s from an inherited IRA, while I understand this is based on my life expectancy, am I supposed to to use the table figure for life expectancy each year, or only in the first year and then decrease it by 1 every subsequent year. The table appears to reduce by .9 each year and so would result in different numbers and I want to make sure I am using the correct calculation.
Permalink Submitted by C Webb on Sun, 2011-12-18 22:16
My mother. I am the oldest of 3 sister beneficiaries and we started off with my age as the oldest.
Permalink Submitted by Alan Spross on Sun, 2011-12-18 22:47
Use Table I and get the divisor using your age in the year after your mother passed. Then reduce that divisor by 1.0 for each year thereafter.
If you each created separate accounts by the end of the year following the year of your mother’s death, each sister could use their own life expectancy. If not, then all of you will have to use the same divisor based on your life expectancy.
Permalink Submitted by C Webb on Mon, 2011-12-19 00:40
So the “minus 1 year” method actually accelerates the depletion process versus adjusting life expectancy as each year passes. In some IRA instances do you actually recalculate based on new life expectancy?
Permalink Submitted by Alan Spross on Mon, 2011-12-19 02:34
Yes, a sole spouse beneficiary can recalculate and owners recalculate, which means going to the table for a new divisor every year.
Only non spouse beneficiaries have to reduce by 1.0 each year, and that is referred to as non recalculation because your life expectancy is not extended as a result of having survived one more year.