Background for question:
Our bank forms and procedure require that we use the IRA Owner's Age on the last day of the year to locate the appropriate Life Expectancy Factor. Today we had a customer DOB 09/11/1936 who said he did not think we were using the correct Life Expectancy Factor to calculate his RMD because he said that he has 3 other banks that are using his current age (70) which provides him with a greater distribution period; whereas we are using his age at the end of the year (71) to determine his Life Expectancy Factor. We referred him to the language in our bank forms that state "You will use ... your age at the end of the year, to determine your life expectancy factor". We also suggested that he could contact the IRS for confirmation. I breezed through Pub 590, but didn't find this specifically mentioned.

Question:
Do you know of a gov't website and regulation number that we could have also referred him to where this would be specifically stated? It would have been nice if we could have pulled this up for him on the internet while he was still in our branch to help alleviate his concerns.

Thank you.

I do not know the answer to your question, but two thoughts cross my mind:

1. Your way is the same way we do it too (which I know does not make it right), and...

2. You have fully disclosed this in your forms and agreements when he opened the accounts, forms he signed stating that he understood and amazingly, *drumroll please* agreed to!

Question... are your forms created in-house, or do you use canned forms? If they are canned forms, call the company that provides and maintains them for you, and ask them to direct you in writing where they find their back-up for the statement. We use CSI, and they do a great job directing us to the spot in the IRS code or regs that back-up their wording, and that is a great tool to use with a customer.

This is under the html version of Publication 590. The PDF version gives this information as well, just using different wording.

"Table II (Joint Life and Last Survivor Expectancy). For your first distribution by the required beginning date, use your age and the age of your designated beneficiary as of your birthdays in the year you become age 70½. Your combined life expectancy is at the intersection of your ages.

If you are figuring your required minimum distribution for 2006, use your ages as of your birthdays in 2006. For each subsequent year, use your and your spouse's ages as of your birthdays in the subsequent year.

Table III (Uniform Lifetime). For your first distribution by your required beginning date, use your age as of your birthday in the year you become age 70½.

If you are figuring your required minimum distribution for 2006, use your age as of your birthday in 2006. For each subsequent year, use your age as of your birthday in the subsequent year. "

The way I think of it is this:
For a 2007 distribution amount, you use the balance in the IRA as of 12-31-06, and use the customer's age as of 12-31-07. Your customer is correct, you should be using age 71.

On a related note:
When I first started as the retirement specialist, I discovered that our core processor was figuring the same way you were. After I pointed out the IRS rule regarding what life expectancy age to use, they corrected their core system for all of their banks. Why do I remember this so well? Because, while they were able to change their core system, they were somehow not able to update the RMD amounts and life expectancies on our accounts for that particular year. So I had to manually fix each and every one of them. I sure hope you don't have to go through that!

Ha, now I re-read your post. YOU are correct, the other banks are not. Sorry.

OMG...you had me second guessing myself and our plan too!!!

Don't do that on a Friday afternoon!!!