Birth date
I posted awhile back about my insurance company using a different age for computing stretch annuity payments in the new le table for 2022 from the age used using the old le table.
I have been unable to convince them that if they used age 63 for the factor in the old le table that they should use age 63 in the new le table. The first 2 payments were from Vanguard, now they are being made by Transamerica.
Today they told me that since my birthday is Sept 20, and the first payment was made on February 1 of the following year that it is correct to use age 62 to compute the factor in the new le table since I was still 62. This sounds incorrect to me, as I thought they used the age in the year the payments are made.
I also asked them why they didn’t change the age to 62 for the February 2021 payment to adjust the factor, since according to them 62 is the correct age and thus the payments have been too high since they started in 2018. They had no answer to that.
Anyway, I can’t fight with them any more, so the final payment for me will be in 2043 instead of 2042, if I’m still around. Now I have to adjust my spreadsheet for estimating future payments, and the tax that I will owe.
Thanks for all the help.
Permalink Submitted by Alan - IRA critic on Mon, 2022-03-07 20:48
If this is a NQ annuity, the stretch payment age determination does not follow a calendar year as qualified plans and IRAs do. The first payment is due within 365 days of the owners’s death, and the beneficiary age divisor is based on the age upon that 365 day deadline, not on the age the beneficiary may attain later in that same calendar year. Once the initial divisor is determined, even though subsequent distributions can be delayed until calendar year end, the initial divisor is reduced by 1.0 for each year thereafter and that retains the anniversary date of owner’s death as the beneficiary age determination date. Does this answer your concern?
Permalink Submitted by lawrence mauskapf on Tue, 2022-03-08 00:14
Yes thank you for the explanation, it was very clear. Based on this, I was 62 during the 365 day period, so Vanguard using 63 years old for the first payment was incorrect, if I knew this I would have objected at the time.