Use the table (and examples) below to calculate required minimum distributions for inherited IRA and other qualified accounts. By using a stretch IRA, you can postpone taxes and reduce your taxable income each year simply by taking the minimum amount required by law. Please contact us to learn more about the advantages associated with these accounts.
| Age | Life Expectancy Factor | Age | Life Expectancy Factor | Age | Life Expectancy Factor |
|---|---|---|---|---|---|
| 40 | 43.6 | 61 | 24.4 | 82 | 9.1 |
| 41 | 42.7 | 62 | 23.5 | 83 | 8.6 |
| 42 | 41.7 | 63 | 22.7 | 84 | 8.1 |
| 43 | 40.7 | 64 | 21.8 | 85 | 7.6 |
| 44 | 39.8 | 65 | 21.0 | 86 | 7.1 |
| 45 | 38.8 | 66 | 20.2 | 87 | 6.7 |
| 46 | 37.9 | 67 | 19.4 | 88 | 6.3 |
| 47 | 37.0 | 68 | 18.6 | 89 | 5.9 |
| 48 | 36.0 | 69 | 17.8 | 90 | 5.5 |
| 49 | 35.1 | 70 | 17.0 | 91 | 5.2 |
| 50 | 34.2 | 71 | 16.3 | 92 | 4.9 |
| 51 | 33.3 | 72 | 15.5 | 93 | 4.6 |
| 52 | 32.3 | 73 | 14.8 | 94 | 4.3 |
| 53 | 31.4 | 74 | 14.1 | 95 | 4.1 |
| 54 | 30.5 | 75 | 13.4 | 96 | 3.8 |
| 55 | 29.6 | 76 | 12.7 | 97 | 3.6 |
| 56 | 28.7 | 77 | 12.1 | 98 | 3.4 |
| 57 | 27.9 | 78 | 11.4 | 99 | 3.1 |
| 58 | 27.0 | 79 | 10.8 | 100 | 2.9 |
| 59 | 26.1 | 80 | 10.2 | 101 | 2.7 |
| 60 | 25.2 | 81 | 9.7 | 102 | 2.5 |
Most beneficiaries who inherit a tax qualified account such as an IRA will have the ability to defer income taxes on a significant portion of the funds. A beneficiary who chooses to utilize the “Stretch IRA” method will only be required to withdraw funds (and pay taxes) based on his/her life expectancy.
For Example:
A 46 year old who inherits a $120,000 IRA from a parent would only be required to withdrawal $3,166.23 from the account. $120,000 divided by 37.9 (37.9 years is the life expectancy of a 46 year old) = $3,166.23
Using this example, the 46 year old beneficiary would potentially lower his/her taxable income significantly. Rather than paying taxes on the entire $120,000 and potentially moving to a higher tax bracket, the beneficiary would be stretching the payments out for his/her lifetime.
It is worth noting, that in most cases (depending on the type of investment account selected) the beneficiary could withdrawal additional funds if needed. The advantage is the beneficiary does not need to withdrawal and pay taxes on the entire amount in one year.
If you will soon inherit an IRA or other qualified account and require assistance in setting up a safe and conservative Stretch IRA account, contact us as well will assist you. We specialize in insured growth and income generating accounts that are suitable for a Stretch IRA conversion.