Trad/Rollover RMDs

Crash

"Take note that calculating your RMD works a bit differently if your spouse is the only primary beneficiary to your account and is more than 10 years younger than you. In this case, you must use the IRS Joint Life and Last Survivor Expectancy Table. You can also find this on IRS Publication 590. However, your life expectancy factor would be based on the ages of you and your spouse. But the formula doesn’t change. You’d still follow the same IRA withdraw rules listed above."

Just discovered this. My spouse is indeed the only primary beneficiary, and is more than 10 years younger than me. Does that work to my advantage?

"...The IRS has other tables for account holders and beneficiaries of retirement funds whose spouses are much younger."

I still have 4 years until reaching age 73.
....And just try to locate those withdrawal tables (and alternative withdrawal tables) re: "combined life expectancy." I dare you. Your tax dollars at work. Geniuses, everywhere:
https://www.irs.gov/forms-pubs/about-publication-590-b

dtconroe

If you keep your IRA accounts in a major brokerage, such as Schwab or Fidelity, they will do all the calculations for you. It has been a pretty simple process for me--I just have to time my withdrawals to fit my personal investing choices, and decide on how much of the withdrawal goes to taxes.

Crash

@dtconroe. much appreciated. I'm a planner. Don't like surprises, don't like to fly by the seat of my pants. So, I'd like to get an estimate. The IRS form looks like they've deliberately HIDDEN what I want to see about this stuff. TRP would not give me an answer. More than likely because I'm not due, yet. "we cannot do this for you, because green is not purple, or we only do this on week-ends, or because your mother's mustache is too long or maybe mars bumped into uranus. Thanks for your business." Fecal.

dtconroe

If you google "RMD Calculator", you get several options, but the Schwab Calculator pops up. It incorporates the age difference between you and your spouse, etc. to give you an estimate, based on the amount in your IRA account at year end, your age, your spouses age, and her Primary Beneficiary status.

yogibearbull

I don't rely on firms' RMD calculators. They have some built-in assumptions that may or may not apply to individual situations.

When I take RMDs, I don't even designate them as RMDs to avoid firms' default RMD screens. I just take them as withdrawals - rules assume the first withdrawals to be RMDs anyway (when RMDs apply).

msf

You're looking for Table II. That is in Pub 590B here:
https://www.irs.gov/publications/p590b#en_US_2022_publink100090290

Table I (which you can find by scrolling up from Table ii) is used for inherited IRAs. Table III (scroll down from Table II) is the "usual" RMD table.

Table III simplifies calculations for most IRAs by assuming that the beneficiary has the same age (life expectancy) as the owner. The IRS figures that if the two ages are within 10 years of each other, that's, well, close enough for government work.

But if the age difference is more than 10 years, it makes a significant difference in the joint life expectancy. Since your spouse is more than 10 years younger than you, your joint life expectancy is longer than it would be if your two ages were the same. So the number you divide your IRA balance by to get your RMD is higher. That's better (lower RMD).

If you were 73 now and your spouse were 62, then the IRS would figure your joint life expectancy as 27,2 (Table II). The "usual" table (Table III) would give a life expectancy of 26.5.

dtconroe

yogibearbull said:

I don't rely on firms' RMD calculators. They have some built-in assumptions that may or may not apply to individual situations.

When I take RMDs, I don't even designate them as RMDs to avoid firms' default RMD screens. I just take them as withdrawals - rules assume the first withdrawals to be RMDs anyway (when RMDs apply).

I have never experienced any "designation" component with the Schwab IRA withdrawals. When I set up my Traditional/Rollover IRA account, that included detailed information about myself, about my wife, about beneficiaries. Schwab then maintains a section for my IRA account, that then tracks withdrawals, end of year balances, how much is remaining to satisfy IRS RMD requirements, by date certain. I have never seen anything on my RMD section, for my IRA account, that has anything other than just a withdrawal from my IRA account. At the end of the year, I then receive a tax statement from Schwab, that has been sent to IRS as well, so that I may include those in my tax submissions. So when you state "they have some built-in assumptions, that may or may not apply to individual situations", I don't know what you are referring to, outside of my legal completion of Schwab IRA accounts, that is used as the basis for tracking and reporting withdrawals from that IRA account, throughout the year.

Please note, that when I process an IRA Withdrawal, I do have to indicate how much taxes are to be withheld as part of that withdrawal, and I have to designate where that remaining amount, after taxes withheld, is to be sent. Normal options for where the withdrawal net amount is sent, includes my Schwab taxable account and my outside checking/savings accounts.

yogibearbull

I have seen issues mentioned elsewhere (e.g. M* TIAA Forum). Sometimes, wrong tables were used. Default is to take RMDs from multiple 403b (from different employers) when the IRS allows consolidation , i.e. round-up and add all 403b RMDs, but take all from any one 403b. Another default may be proportional withdrawals from all holdings when many may prefer to take it from a single holding.

Note that similar consolidation rules apply to multiple T-IRAs held at same/different brokers. i.e. round-up and add all T-IRA RMDs, but take all from any one T-IRA.

BTW, I have signed up RMD calculation/estimation services at TIAA and Vanguard, but I use those to just to double-check my own calculations.

dtconroe

I was assuming the OP was specifically talking about Traditional/Rollover IRAs as titled in this thread, not other types of retirement accounts such as 401/403/457 accounts. Those are two very different kind of retirement accounts, and when you set up your Schwab Accounts, I believe they are handled separately, in separate Schwab accounts. I do not believe Schwab would ever co-mingle Rollover IRAs with any remaining 401/403/457 holdings. I don't currently own any 401/403/457 accounts, so I do not have any personal experience with my Schwab brokerage holding both kinds of retirement accounts.

Crash

msf said:

You're looking for Table II. That is in Pub 590B here:
https://www.irs.gov/publications/p590b#en_US_2022_publink100090290

Table I (which you can find by scrolling up from Table ii) is used for inherited IRAs. Table III (scroll down from Table II) is the "usual" RMD table.

Table III simplifies calculations for most IRAs by assuming that the beneficiary has the same age (life expectancy) as the owner. The IRS figures that if the two ages are within 10 years of each other, that's, well, close enough for government work.

But if the age difference is more than 10 years, it makes a significant difference in the joint life expectancy. Since your spouse is more than 10 years younger than you, your joint life expectancy is longer than it would be if your two ages were the same. So the number you divide your IRA balance by to get your RMD is higher. That's better (lower RMD).

If you were 73 now and your spouse were 62, then the IRS would figure your joint life expectancy as 27,2 (Table II). The "usual" table (Table III) would give a life expectancy of 26.5.

I appreciate your work for ALL of our sakes. What you say is clear, but I am unable to transfer and "translate" it to the particular details of my own situation. The numbers on the tables relate to other numbers on the tables, but none of it means anything since a starting point is impossible for me to find. I've sent you a Direct Message. I hope you don't mind.

Crash

@msf Ah! Someone else has come up with it for me: 33.4 divisor. (19 years.)
And now I think I can see how the damnable Table works, now that I've uncovered that number!

It does not help the likes of me at all that the Table is chopped up into different pieces, as presented there.

msf

Glad to see you've got the hang of it, regardless of how confusing the table is.