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Planning for the Younger Woman in Your Life

Younger wives"If this is a second marriage, make sure the ex-spouse is no longer the beneficiary on your accounts."

If your wife is about 15 years younger than you are, there are some special steps to take when you calculate your required minimum distributions from your IRA.

Kiplinger's article "Retirement Distributions When Your Spouse Is Much Younger," explains that most people use Life-Expectancy Table III, the Uniform Lifetime Table, in Appendix B of IRS Publication 590 to calculate their required minimum distributions ("RMD"). However, if your sole beneficiary is a spouse who is more than 10 years younger than you, then you should use Life-Expectancy Table II, the Joint Life and Last Survivor Expectancy, to determine your RMD. That table requires you to withdraw less money each year than you would if your spouse were older.

Here's an illustration: if you're 70½ in 2015 and need to take your first RMD, you would divide your account balance as of the end of 2014 by 27.4. So if you had $100,000 in your account, you'd need to withdraw $3,649.64. But if your sole beneficiary is your wife, age 53, you'd divide your account balance by 32.6 and would need to withdraw only $3,067.48.

In Life-Expectancy Table II, look for your age on the left side of the table, then find where that line intersects your spouse's age on the top. Some RMD calculators will let you input your spouse's birthdate to determine your RMD, even if you need to use the different life-expectancy table.

You should also make sure your IRA administrator knows your spouse's birthdate, so they will use the correct table when calculating your RMDs—particularly if you have automatic RMD withdrawals.

It's also a good time to be certain your beneficiary designations are up-to-date. The beneficiary designations on your retirement accounts and life insurance take precedence over the information in your will. Even if you have updated your will, your IRA will go to your designated beneficiary. This will be the case even if you've been divorced, married, or wanted to change your beneficiary for any other reason.

Reference: Kiplinger (December 16, 2015) "Retirement Distributions When Your Spouse Is Much Younger"

 

 

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