72t beneficiary 10 yrs younger- can annuity method be used?
IRA owner is 56, designated beneficiary is 38. Will use Joint life expectancy table but not sure if annuity method can be used, or is only the RMD or Amortization available due to 10+ year younger beneficiary? Annuity method produces largest monthly payout. Advice?
Permalink Submitted by Alan - IRA critic on Wed, 2017-01-25 22:53
Any of the 3 methods can be used, and amortization will always be slightly higher. If you want the highest distribution per dollar of account balance, use individual not joint. Individual has the shortest life expectancy no matter how much younger the beneficiary is. Joint life expectancy will produce annual distribution far less than individual. The IRA owners should generally partition his IRA into two accounts, one containing the exact balance needed to generate the distribution amount and the other IRA used for emergency needs. Using individual will allow the other IRA to be larger.
Permalink Submitted by Ann Felldin on Thu, 2017-01-26 01:22
I thought I had to use the joint table since there was a named beneficiary (aka designated beneficiary) on Jan 1st. Starting the distributions tomorrow, Jan 26th. Used today’s Jan 25th account balance to calculate. Hope that’s correct. Emergency needs covered elsewhere. Thanks for your input!
Permalink Submitted by Alan - IRA critic on Thu, 2017-01-26 04:07
You can ignore the beneficiary. Also, if you take your first distribution in Feb (a week from now) you can use a much higher interest rate of 2.36 instead of 1.76. And you can still take out the full annual amount for 2017.