Now I am really confused. How much and how ... - MS Estate Planning

The Life Expectancy Method

The second method is by far the most popular method and generally must be used for all defined contribution Qualified Plans and most IRAs. ?Under the Life Expectancy Method, the Required Minimum Distribution is determined by dividing your account balance as of December 31st of the prior year by the life expectancy number obtained from a table published by the IRS. ?The life expectancy number is also known as the "Divisor." ?With one exception, you must use the Divisor from the following table found on the next page (known as the Uniform Table).

There is one exception to using the Uniform Table for calculating your lifetime Required Minimum Distributions. ?If the only beneficiary of your retirement plan during the entire calendar year is your spouse, and if your spouse is more than 10 years younger than you, then you must use your actual joint life expectancy (obtained from another table published by the IRS) to determine the Required Minimum Distribution for that year.

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Note that the ability to use the actual joint life expectancy of you and your "more than 10-year younger spouse" is determined on a year-to-year basis. ?If your spouse dies or you divorce your spouse during a Distribution Year, the law allows you to continue to use the actual joint life expectancy table for that Distribution Year. ?However, for each subsequent year you must revert back to the Uniform Table (unless you again marry a more than 10-year younger spouse!). ?The advantage of using the divisor from this second table is that the divisor will be larger than that of the Uniform Table and will therefore result in a?smaller RMD.

Excerpt from The Complete Guide to Estate and Financial Planning in Turbulent Times (Collaborative Press, 2011) - Walt Dallas, Contributing Author

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Source: http://blog.estateplanning123.com/2012/08/retirement-planning-now-i-am-really-confused-how-much-and-how-often-do-i-need-to-take-distributions--3.html

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