Life expectancy is usually determined using the Single Life Expectancy table and the beneficiary’s age on 12/31 of the year following the owner’s death. However, if this is not the first year of distribution for the beneficiary, there is an additional step. First, we find the original life expectancy using the Single Life Expectancy table and the beneficiary’s age on 12/31 of the year following the owner’s death. Then, the current life expectancy is calculated by subtracting one for each year that has passed, from the original life expectancy. Likewise, in all future years, the remaining life expectancy is calculated by subtracting one for each additional year that has passed. It is not allowed to lookup or ‘recalculate’ a new starting life expectancy after distributions have begun.
If the account owner was younger than the beneficiary, and it was past the required begin date for distributions when the account owner died, the beneficiary can choose to use the account owner’s life expectancy to calculate Required Minimum Distributions (RMD). In this special case, the result will always produce a lower RMD. If this situation occurs, this calculator will use the account owner’s age when calculating RMDs. Other than using the account owner’s age at death, the calculation is identical to the one stated above.
A final option, used by this calculator, is the ability for a spouse to take an inherited account and treat it as his or her own. In this case, no distributions are required until the year in which the spouse reaches age 70 1/2. When distributions do begin, the spouse can use the Uniform Lifetime Table, which produces longer life expectancies than the Single Life Expectancy table, to determine the applicable life expectancy. In addition, a spouse is able to ‘recalculate’ or lookup a new life expectancy from the Uniform Lifetime Table each year. This produces the lowest RMD in all but the most unusual situations. This calculator will always assume that a spouse will wish to treat an inherited IRA as their own.