Life Expectancy Tables – IRS

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IRS Life Expectancy Tables. Calculating Table H.

Commutation Factors Table H IRS Actuarial Tables.

If you have seen our basic introductory course on developing commutation functions, you must have wondered what good these tables are, especially if you are not an actuary.  Well if you are a tax accountant or a tax lawyer you must be familiar with the commutation tables used by the IRS in the US, Table H. Table H contains commutations factors, at various interest rates, that are used in the valuation of annuities, life estates, and remainders. Or in simple words, Income, gifts and estate tax valuations.  

A common question that comes is how do you get from Actuarial Life tables to the IRS Table H. If you are trying to reconcile the values what is it that you are missing and needs to change.  Here is how we do it. 

Life Expectancy Tables. IRS Table H.

The tables contain values for Life Expectancy Tables - IRS

Of these three factors the procedure for calculating Dx was already addressed in our earlier course as given below:

Life Expectancy Tables - IRS

And lx = number of persons who attain age x according to the mortality table used. For this purpose it is the based on the Life Table 2000CM.

While the calculation of Mx is discussed in that earlier post the factors given on IRS website are for Life Expectancy Tables - IRSThe accent at the top of M makes a difference in the calculation. Where Mx is used in the calculation of an assurance payable at the end of the year of death, Life Expectancy Tables - IRS, is used in the calculation of an assurance payable at the moment of death. It is given as: Life Expectancy Tables - IRS

used in the determination of the present value of an annuity, where the first payment is at the end of a year which then continues annually during the life of the annuitant. Life Expectancy Tables - IRS, however, is used for the calculation of the actuarial present value of a complete life annuity which makes an adjustment payment for the period of death.

We use the relationships between an assurance payable at the moment of death, a continuous life annuity, and a complete annuity to determine Life Expectancy Tables - IRS as follows:

The actuarial present value of an assurance payable at the moment of death is given by:

Life Expectancy Tables - IRS

And incase you are wondering what the finished product would look like, here is a small sample.

Life Expectancy Tables
Life Expectancy Tables