RMD divisor
When using the Uniform Distribution Table it is my understanding that the divisor changes each year based on the current age of the IRA owner. For example in 2013, the IRA owner is age 75 and their December 31 2012 account balance is $100,000. Their life expectancy is 24.7 and their required distribution is $4,049. The following year 2014 assuming their account balance is $95,951, their life expectancy is now 23.8 which is their new divisor, their required distribution would be $4,032. I want to confirm this is the correct way to use the Uniform Distribution Table?
Permalink Submitted by mk foss on Tue, 2013-09-03 16:38
You are correct – the owner’s age in the current year determines the divisor. The old term for this is “recalculating” so if you see a reference to that, it simply means that the table is consulted every year. In contrast, the single life table is used by beneficiaries who have inherited an IRA. Beneficiaries cannot recalculate. They determine the life expectancy factor based on their age in the year after the death for the first RMD. Subsequent RMDs are determined by reducing the initial factor by 1.0 each year.