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November 20, 2014

Life-Expectancy Rule

Your Guide

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Definition

A rule under which beneficiaries with inherited retirement accounts ( inherited IRAs and employer sponsored retirement plans), must take their required minimum distributions over the applicable life-expectancy.

The life-expectancy can be that of the beneficiary or the deceased retirement account owner.

Referring Cite

IRC. §401(a)(9)

Additional Helpful Information

  • If the retirement account owner dies before the required beginning date (RBD), distributions can be taken under the five-year rule, or the life expectancy rule. If the life-expectancy rule applies, the life expectancy of the beneficiary is used.The life expectancy option is not available to a non-person beneficiary.
  • If the retirement account owner dies on/after the RBD, distributions can be taken under the life expectancy rule. The life expectancy used would be the longer of:
    • the beneficiary’s life expectancy, or
    • the remaining life expectancy of the deceased retirement account owner.
  • For a non-person beneficiary, the remaining life expectancy of the deceased retirement account owner must be used if the retirement account owner dies on/after the RBD,.
  • More than is required under the life expectancy rule can be withdrawn at any time.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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