The Choice Is Yours

As you calculate your required minimum distributions in subsequent years, you have two choices:

1. You may simply subtract a year from the previous year's life expectancy figure. Using the example in Calculating Your RMD, at the end of 1997 you could simply divide your account balance as of December 31, 1996, by 21.5.
2. Alternatively, you could recalculate your life expectancy each year, which would minimize the amount of your required distribution. In the example for Calculating Your RMD, you would check the IRS life expectancy tables for a 71-year-old with a 67-year-old beneficiary and find a joint life expectancy figure of 21.7 years. Note that once you choose to use the IRS tables to determine your joint life expectancy in subsequent years, you must continue to do so for the remainder of your life.

The above examples represent simple illustrations of required minimum distribution calculations. In many cases, the calculations can be more complex. For a more detailed explanation of the minimum distribution rules, you should refer to IRS Publication 590. If you need assistance, the bank, mutual fund, or other institution serving as the trustee for your retirement plan should be able to assist you in the required minimum distribution calculations.