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Financial Information for Senior Military Officers

Your Life Expectancy After You're Dead? Yes, the IRS Says You Have One.

Your Life Expectancy After You're Dead? Yes, the IRS Says You Have One.
One of the great advantages of Qualified Plans and Traditional IRAs is that you get to deduct your contributions today and the earnings on your account accrue tax deferred.  But, the IRS wants to get that tax money...and the sooner the better.  You must take Required Minimum Distributions (RMDs) by your Required Beginning Date (RBD).  (By the way, I like this article...I've already worked in two acronyms in the first paragraph!)  For most, the RBD is 1 April of the year after you turn 70 1/2.  Most of us know that.  But most of us don't know how much we have to take out.  The amount you have to take out is based upon your life expectancy.  But you say, "I don't know how long I'll live!"  Not to worry, the IRS knows how long you will live.  They know everything...

Your Own IRA

In most cases, calculating RMDs for your IRA is relatively simple.  The IRS has a uniform life expectancy tables that will tell you how long you will live.  For example, at age 70 the life expectancy of an IRA owner is 27.4 years.  What is interesting is that if your spouse is more than 10 years younger than you, your life expectancy increases (I'll leave that to the IRS to explain).  For example, if you're aged 70 and your spouse is age 50 your life expectancy is 35.1 years.    Once you determine your life expectancy you simply divide your account balance on 31 Dec of the prior year by your life expectancy to determine your RMD.

On a related note, according to the IRS if you make it to 115 you may never die as the life expectancy for those age 115 and older is 1.9 year.  So, at each birthday after age 115 you've still got 1.9 years to live.  Again, I'll leave it to the IRS to explain.

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