RMD and Annuity Life Expectancy Tables
RMD and Annuity Life Expectancy Tables
Are the same Life Expectancy Tables used for both RMD and Annuity Exclusion Ratio calculations?
Re: RMD and Annuity Life Expectancy Tables
No. Life expectancy for required distributions is slightly longer than for annuities.winski58 wrote:Are the same Life Expectancy Tables used for both RMD and Annuity Exclusion Ratio calculations?
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Re: RMD and Annuity Life Expectancy Tables
bsteiner wrote:No. Life expectancy for required distributions is slightly longer than for annuities.winski58 wrote:Are the same Life Expectancy Tables used for both RMD and Annuity Exclusion Ratio calculations?
This is because people who buy annuities are self selected as people who expect to live a longer than average life.
Ralph
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Re: RMD and Annuity Life Expectancy Tables
I'm puzzling over what "longer" means here.bsteiner wrote:No. Life expectancy for required distributions is slightly longer than for annuities.winski58 wrote:Are the same Life Expectancy Tables used for both RMD and Annuity Exclusion Ratio calculations?
I guess you're saying that the RMD expected years remaining table is a bit longer than current expected lifespans, i.e. 27.4 years given that you've reached age 70, where a more accurate number of average years remaining might be 26.9 or so.
The puzzling part is that Social Security delayed retirement credits apparently increase a bit more than current actuarial tables might compute. This because the SSA is using outdated mortality tables and lifespans have increased since those tables were made.
So the IRS and the SSA are using different actuarial assumptions which is fine by me...
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Re: RMD and Annuity Life Expectancy Tables
We annuity purchasers are self selected, yes, but that tends to argue the OPPOSITE of what bsteiner is asserting...ralph124cf wrote:bsteiner wrote:No. Life expectancy for required distributions is slightly longer than for annuities.winski58 wrote:Are the same Life Expectancy Tables used for both RMD and Annuity Exclusion Ratio calculations?
This is because people who buy annuities are self selected as people who expect to live a longer than average life.
Ralph
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Re: RMD and Annuity Life Expectancy Tables
Yes, Table V of IRS Publication 939, pg 26 (annuity table) has a 77 year old with an 11.2 multiple and the RMD Table is 21.2. So a 77 year old according to the RMD table is expected to live to 98 and the annuity guy is expected to live to 87. Am I interpreting this correctly?The Wizard wrote:We annuity purchasers are self selected, yes, but that tends to argue the OPPOSITE of what bsteiner is asserting...ralph124cf wrote:bsteiner wrote:No. Life expectancy for required distributions is slightly longer than for annuities.winski58 wrote:Are the same Life Expectancy Tables used for both RMD and Annuity Exclusion Ratio calculations?
This is because people who buy annuities are self selected as people who expect to live a longer than average life.
Ralph
Re: RMD and Annuity Life Expectancy Tables
No. The RMD table is based on the joint and survivor life expectancy of the IRA owner and a person 10 years younger (in your example, the joint and survivor life expectancy of two persons, ages 77 and 67). The comparison should be to the single life table for beneficiaries, which is 12.1 years at age 77. That's still different from the annuity table, but only slightly.winski58 wrote:... Table V of IRS Publication 939, pg 26 (annuity table) has a 77 year old with an 11.2 multiple and the RMD Table is 21.2. So a 77 year old according to the RMD table is expected to live to 98 and the annuity guy is expected to live to 87. Am I interpreting this correctly?