Uniform Lifetime Table for 72(t) RMD method
Whenever I look for the Uniform Lifetime Table for calculating a 72(t) payment based on the RMD option (vs. amortization or annuitization), I can only find factors starting at 70.5 or (now) 72.
Is there a version of this table somewhere that includes younger ages – e.g., ages for people who’d need a 72(t) in the first place? I am guessing such an extended table exists; I’m just not uncovering it in my searches.
Please and thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2021-05-25 20:17
It is included in RR 2002-62, Appendix A: draft date: 09-26-2002 (irs.gov)
However, that Uniform Table will be obsolete next year with the new mortality rates, and the new Regs do not appear to include it for ages under 72. That said, the Uniform Table result could be duplicated by using Table II with age of applicant and a beneficiary 10 years younger unless a sole spousal beneficiary more than 10 years younger.
The RMD method for 72t plans is not frequently used since it produces a lower calculation than the fixed dollar methods (even when interest rates are low), and requires annual recalculation which increases the risk of error. When the RMD method is chosen, the usual table used is Single Life Table I, since it produces the highest calculation of any of the RMD tables, but still less than the fixed dollar methods. To achieve greater flexibility a fixed dollar method is typically used to start the plan, but the one time permitted switch to RMD is kept in reserve should taxpayer wish to reduce distributions later in the plan. When making the one time switch, any of the RMD tables can be chosen for the resulting RMD method calculations, but that same table must be then used through the end of the plan.
If the fixed dollar method produces a larger calculation than needed, it is better to partition the IRA before starting distributions into an account with the balance needed fund expenses plus inflation later down the road, and use the other IRA outside the plan for emergency needs (subject to penalty) as a form or insurance against busting the plan.