Required Minimum Distribution (RMD) - Multi-Generation Projection

Required Minimum Distribution (RMD) - Multi-Generation Projection Definitions

Calculation notes

This calculator follows the latest IRS rules and life expectancy tables, which were finalized on April 16th, 2002. These new IRS regulations were optional in 2002 but became mandatory as of January 1st, 2003. If you have questions, please consult with your own tax advisor regarding your specific situation.

Owner name

Please enter the account owner's name.

Owner birthdate

Please enter the account owner's birthdate.

Name of account

Please enter the name of the account for this analysis.

Hypothetical Interest rate

This is the expected rate of return on your account. This is only used to help project your future account balances (which of course will impact your required minimum distribution). The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31^st 2019, had an annual compounded rate of return of 13.2%, including reinvestment of dividends. From January 1, 1970 to December 31^st 2019, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.7% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Amount subject to RMD

Investment account, mutual fund accounts and fixed annuity contracts use the previous year-end value. Variable annuity contracts use the actuarial year-end contract value, which may include living and death benefits, when determining the RMD amount. For variable annuity contracts, contact the issuing company for this information.

Plan type

Please enter the plan type. The plan type will not affect the calculations, it is used for descriptive purposes only.

Multi-generation checkbox

Multi-generation projection is a concept to potentially help extend the period of tax-deferred earnings beyond the lifetime of the original account owner. The concept works as follows:

With Spouse as First Beneficiary

1. The original account owner names his/her spouse as sole primary beneficiary of the account. While alive, the original account owner begins taking RMD payments at age 70-1/2, using the Uniform Distribution Period Table to calculate the distribution (unless the spouse is more than 10 years younger than the owner).

2. Upon the death of the original account owner, the surviving spouse rolls over the funds to his/her own qualified account. Any RMD amount from the deceased spouses's account cannot be rolled over. The surviving spouse names a new beneficiary, such as children, and begins taking RMD at age 70-1/2 based on the Uniform Distribution Table.

3. Upon the surviving spouse's death, beneficiaries are required to take distributions. The beneficiaries generally take distributions based on the life expectancy of the oldest beneficiary.

With Non-spousal First Beneficiary

1. The original account owner names a beneficiary or beneficiaries. While alive, the original account owner begins taking RMD payments at age 70-1/2 using the Uniform Distribution Table to calculate the distribution.

2. Upon the death of the original account owner, the beneficiaries are required to take distributions. The beneficiaries generally take distributions based on the life expectancy of the oldest beneficiary.

The technique is designed for individuals who will not need the funds for their own retirement needs.

The figures created for the multi-generation projection are hypothetical and based on current and variable assumptions you selected to help illustrate a concept. Many factors could impact this hypothetical concept, such as possible changes to tax laws in the future, the impact of inflation and other risks. The figures do not represent past or guarantee future performance of any specific product. Actual rates of return may vary and are not guaranteed.

Owner's assumed death

When calculating for the multi-generation projection, we use this date as the assumed death of the account owner.

Is beneficiary a spouse? Checkbox

Check this box if your only beneficiary is your spouse. The new IRS rules use a uniform table to calculate all life expectancies for determining a minimum distribution. The only exception to this rule is if the only beneficiary is a spouse and he or she is more than 10 years younger than the account owner. In this situation, the joint life expectancy table is used. The Joint Life expectancy table normally produces lower required distributions.

We also use this entry for the multi-generation projection to determine whether to calculate for a spouse's beneficiary life expectancy.

Beneficiary birthdate

Please enter the account beneficiary's birthdate.

Beneficiary name

Please enter the beneficiary's name.

Beneficiary's assumed death

When calculating for the multi-generation projection, we use this date as the assumed death of the account's beneficiary. This is only used if the beneficiary is a spouse.

Spouse's beneficiary birthdate

When calculating for the multi-generation projection and the original beneficiary of the account is a spouse, we use this birthdate to determine the life expectancy of the spouse's beneficiary.