Stop Using Spreadsheets for RMD Calculations

Many firms struggle with calculating Required Minimum Distributions (RMDs) using spreadsheets or, worse, a financial calculator. Of course, when participants are alive and taking RMDs, the calculations are simple. But even that situation is slightly compounded by the new 2022 longevity tables. Some advisors we have spoken with did not realize the tables had changed.

Of late, we are seeing more and more angst over the increasing number of inherited IRAs and other retirement plans. Although it is easy to get the decedent’s date of birth and date of death from the client, the calculations take on greater complexity with more arcane rules. 
Advisors have mistakenly used the fixed-term method (N-1 rule) for surviving spouses when they should have recalculated distributions each year using the single life table, which yields a smaller RMD for the survivor.
The ProTracker Advantage RMD Calculator and Tracking Assistant was first developed in 2002 and has been updated continuously as IRS rules have changed. The SECURE Act of 2019 introduced the 10-Year-Rule and Eligible Designated Beneficiaries (EDBs). The EDBs bear close watching because minor children will fall out of the 10-Year Rule exception when they reach the age of majority in their home state (18, 19, or 21, depending on the state).
Today, pen and paper budgets have given way to computer spreadsheets. Similarly, calculating required minimum distributions on spreadsheets has given way to complex algorithms to keep up with changing rules. In 1975 (when IRAs were first allowed), who knew that IRA rules would get so complex? And how did Congress come up with the age 59-1/2 and 70-1/2 rules? We will never know.

Would you like a demo of our required minimum distribution (RMD) calculator and tracking system within ProTracker Advantage.
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