Please confirm factor for RMD calculation
My dad died in July 2007 at the age of 81. He left to my 2 siblings and I an IRA he had already inherited from an older friend who died on 7/17/96. I do not know the age of the friend. Since my dad was born in 1926 and 70 years old upon his friends death, he must have been 71 the following year when he made his first distribution. According to Table 1, it appears he would have started at a factor of 16.3. Reducing this by 1.0 each of 11 years we arrive at 5.3 in 2008.
Were non-spouse beneficiaries allowed to use their own life expectancies in 1996 and 97?
Is my calculation correct? Should my siblings and I use 5.3 as our factor this year?
Permalink Submitted by Alan Spross on Fri, 2008-11-07 21:25
Even though the original decedent passed prior to the adoption of the current mortality tables in 2003, it is permitted to reconstruct the RMD back to 1997 using the new tables and reducing the divisor by 1.0 each year as you have done. Therefore, the 5.3 divisor is correct. If I recall correctly, the pre 2003 RMD requirements for deaths after the required beginning date called for use of the beneficiary’s single life expectancy in similar fashion.
Yes, all of you should use 5.3 as the 2008 RMD divisor.
Permalink Submitted by mk foss on Sun, 2008-11-09 00:18
Alan’s answer is correct but I wanted to make a historical correction.
The 1987 proposed regulations used life expectancy for a beneficiary, but started with the beneficiary’s age wehn the owner reached his RBD and reduced the factor by 1 for each year the original owner took distributions.
The current regulations allowed everyone to use the new method which was extremely helpful.