Once you reach 70½, you are required to withdraw from your IRA. How much do you withdraw? The IRS has simplified the calculation with Life Expectancy Tables to help you calculate your withdrawal.
Use Table III if you are the IRA owner, unless your spousal beneficiary is more than 10 years younger than you are.
Use Table II if you are the IRA owner and the periodic payments are for your life and the life of your spouse who is more than 10 years younger than you.
Use Table I if you are an individual and the owner’s designated beneficiary but are not both the owner’s spouse and sole beneficiary. (There are special rules for the owner’s spouse.) Use Table I if you are the owner’s estate or otherwise not an individual and the owner died on or after the required beginning date. (Not to be used in the year of the owner’s death.)
Since the 1996 tax law change, one of the main areas of dispute between taxpayers and the Internal Revenue Service has been the allocation of “damage awards.” When you, the taxpayer, receive a settlement payment for damages, the tax consequences vary, depending on the type of award received.