3 Retirement Plan Life Expectancy Tables

By Beverly DeVeny, IRA Technical Expert

Follow Me on Twitter: @BevIRAEdSlott

There are three life expectancy tables used by IRA and employer plan account owners and beneficiaries. These tables were last updated by IRS for optional use in 2002 and were mandatory in 2003. You cannot choose which table you would like to use. Each one must be used in certain situations.

Table 1: Single Life Expectancy Table
This table must be used by all beneficiaries of inherited accounts. Generally a beneficiary looks up their age in the year after the account owner dies to find their life expectancy factor (you look up the age the beneficiary is on the last day of the year). Beneficiaries use this factor to calculate the required distributions from the inherited IRA. They only go to this chart one time. Each year after that, the life expectancy factor is reduced by one.

Beneficiaries can name their own beneficiaries (successor beneficiaries). If the beneficiary dies while there is still a balance in the retirement account, the successor beneficiary continues to take distributions using the reduce-by-one method established by the original beneficiary.

This table will generate the largest required distribution of all three tables.

Note: The rules for using the Single Life Table are different for beneficiaries who inherit through a trust or an estate, and there is another set of rules for spouse beneficiaries who do not move the inherited retirement funds to their own accounts.

Table 2: Joint Life Table
This table is used only by account owners with a spouse that is more than 10 years younger and when the spouse is the sole beneficiary of the IRA. The account owner finds the factor using their age and their spouse’s age (the age they are at the end of the year). The account owner will go back to this table each year to look up their factor as long as they continue to meet the criteria.

This table will generate the smallest required distribution of all three tables.

Table 3: Uniform Lifetime Table
This table is used by most account owners, except as noted for Table 2. It does not matter who the beneficiary of the account is. This table is never used by a beneficiary. The account owner looks up the age they will be at the end of the year on the table and goes back to the table each year to find the factor for the current year.

It is important that you know which table you need to use so that you can accurately calculate required distributions from your retirement accounts. Use of the wrong table could result in too much money being paid out for the year. That will unnecessarily deplete your retirement accounts and increase your income tax bill.

On the other hand, use of the wrong table could also result in too little being paid out for the year. That could lead to a penalty of 50% (that is NOT a typo) of the amount not distributed. Neither one of those results is a good thing.