Life Expectancy Table Question

Submitted by Kevin O'Hearn on Fri, 2019-11-08 17:13

Hello, I have client who started taking RMD on a IRA BDA account in 1999 age 63 using a single life expectancy factor of 21.6 and has been taking yearly RMD’s based on the 21.6 factor. I see in 2001 or 2002 the single life expectancy tables change and the factor for a 63 year old is now 22.7. My client didn’t update the factor and continued using the 21.6 factor. Is there anything out there saying that the client is required to use the updated factor or if they didn’t switch they just missed out on being able to stretch the BDA out further? Any assistance would be greatly appreciated.

Thank you,
Kevin



Submitted by William Tuttle on Fri, 2019-11-08 18:14

oops misread the post

Submitted by David Mertz on Fri, 2019-11-08 18:16

If they continued to use the old factor, they simply took out more than required.  It looks like the factors might be updated again beginning with RMDs for 2021, with the life-expectancy in the Single Life Table for a 63-year-old moving up to 24.5.  Of course by now this client’s IRA BDA is nearly fully drained, so the upcoming change doesn’t affect this client much.  Depending on the type of investments, it could also have been beneficial to take more than was required to be able to get the money into investments where growth would be taxable at long-term capital gains rates rather than at rates for ordinary income.

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