life expectancy method

Definition

A category of annuity distribution methods that determine payments from life expectancy charts. Two examples of life expectancy methods are the term certain method and the recalculation method. There are IRS tables that determine life expectancy of the owner or the joint life expectancies of the owner and a beneficiary. The withdrawal amount is calculated by dividing the balance at the beginning of the year by the factor found in the IRS life expectancy tables. For each year that passes by, the life expectancy factor is reduced by one.
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amortization method annuity factor method