1987 Proposed Regulations

If the plan owner has not named a beneficiary, then there are two methods for determining the plan owner’s life expectancy each year: Term Certain method or Recalculation method. Use the Recalculate Owner’s Life Exp. check box to determine the method:

• Term Certain method: Clear the Recalculate Owner’s Life Exp. check box. The program uses Table V to determine the owner’s life expectancy in for the Required Beginning Date (first year that distributions are required). Thereafter, the program subtracts one from the life expectancy each year.
• Recalculation method: Click the Recalculate Owner’s Life Exp. check box. The program uses Table V to determine the life expectancy each year.

If the plan owner has named a beneficiary

Plan owners and beneficiaries have the ability to recalculate their life expectancies annually (see Note). If the plan owner has named a beneficiary, then there are actually four methods of recalculating life expectancies each year. Use the Recalculate Owner’s Life Exp. and the Recalculate Beneficiary’s Life Exp. check boxes to determine the method:

• Joint Recalculation method: Click both check boxes. Both life expectancies are recalculated. The program uses Table VI to determine the minimum distribution from the life expectancies.
• Joint Term Certain method: Clear both check boxes. Neither life expectancy is recalculated. Both the owner and the beneficiary use the term certain method. Both life expectancies decrease by 1 annually.
• Hybrid method: Only click Recalculate Owner’s Life Exp. The owner’s life expectancy is recalculated, and the beneficiary uses the term certain method. Using the beneficiary’s deemed age (determined using single life Table V) and the owner’s actual age, the program uses joint life Table VI to determine the minimum distribution. Many planners recommend this method when the plan owner is older than the beneficiary.
• Hybrid method: Only click Recalculate Beneficiary’s Life Exp. The beneficiary’s life expectancy is recalculated, and the owner uses the term certain method. Using the owner’s deemed age (determined using single life Table V) and the beneficiary’s actual age, the program uses joint life Table VI to determine the minimum distribution. Planners recommend this variant when the beneficiary is older than the plan owner.