America’s Internal Revenue Service turns out to be a pretty optimistic place. This may surprise people who associate the IRS with dense, bureaucratic prose, obscure tax calculations, and no-nonsense audits. But the irrefutable evidence of innate IRS optimism is right there for all to see, in Table III of IRS publication 590-B.
(That description of the document just screams “IRS,” doesn’t it?)
Publication 590-B tells you when and how you need to determine the mandatory “required minimum distributions” from your 401(k) plan and other individual retirement arrangements, because you eventually have to start taking those retirement funds that have been sitting in your retirement account in pre-tax form and start paying tax on them. As Publication 590-B explains at page 8, you figure your RMD “by dividing the IRA account balance (defined next) as of the close of business on December 31 of the preceding year by the applicable distribution period or life expectancy” set by one of the Tables.
Table III, found at page 65 of Publication 590-B, is the uniform lifetime table that many taxpayers will use. It gives a number for each year of expected longevity that you then use to complete that equation. And that’s where the optimism seeps in, because Table III includes numbers all the way up to age “120 and over.” That’s right: the IRS thinks there’s a sufficient chance that you might make it to 120 that it has formalized and published the appropriate retirement plan tax calculation if that actually occurs.
Pay no attention to the fact that records indicate that precisely one person in modern world history–Jeanne Calment of France, who lived to age 122 before dying in 1997–has made it to their 120th birthday! Some scientists think you have a shot of hitting that milestone, and now you can be confident that the IRS does, too.
By the way, if my understanding of Publication 590-B is correct, if you make it to 120 you’ll have to take half of whatever remains in your retirement account as income at that point, and pay tax on it. Think of the birthday party you could have!