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News Flash - IRS Issues New Proposed Regulations for Retirement Plan Distributions

On 1/11/2001 the IRS issued new regulations intended to simplify the complex distribution rules originally proposed in 1987. The new rules are proposed to apply for required minimum distributions for calendar years beginning on or after 1/1/2002. Taxpayers may, however, rely on the new proposed regulations for distributions occurring in 2001. Taxpayers wanting to slow down distributions will want to rely on the new rules this year. Also,with the new rules, errors can now be corrected after the required begin date of 70 ½.

The new rules provide a new "Uniform Distribution Table" to be used by all taxpayers except those whose spouse is ten years younger than the retirement plan participant.

The new uniform table and accompanying regulations eliminate the need for the following:

Naming a "designated beneficiary" by the required begin date
Determining the age of any beneficiary except a spouse who is ten years younger than the participant
Changing distribution calculations when beneficiaries are changed
Declaring recalculation or term certain distribution methods

The significant positive impacts to account holders and heirs include:

There will no longer be a situation that requires payout within one year of a participant's death
Beneficiaries need only be identified by the last day of the year after the year of death rather than the required begin date
Distributions will be payable to beneficiaries over their life expectancy rather than the old five-year rule, unless the five-year rule is elected
Post death changes can now be made to beneficiaries by use of disclaimers or by cashing out other beneficiaries

Post death distribution rules include the following:

Life expectancies of beneficiaries is determined by their age in the year after the participants death
For those with no named "designated beneficiary", continuing payouts will now be made over the deceased participant's remaining life expectancy
If the participant dies prior to the required begin date without a named beneficiary the account must be paid out within five years of the participant's death
Distributions will be based on the life expectancy of the oldest beneficiary
Surviving spouses can rollover the account to their own name if they are the only named beneficiary.
If the spouse is the oldest of multiple beneficiaries, life expectancy will be recalculated annually by use of the uniform table as long as the spouse is alive
After a surviving spouse's death and for all other beneficiaries, life expectancy is decreased by one year for each year after the participant's death.

The required minimum distribution can be calculated for most individuals using this Table.

Caution: Do Not Use this table if your spouse is more than 10 years younger than you!

Uniform Distribution Table
IRA Owner's Age	RMD Factor	.	IRA Owner's Age	RMD Factor
70	26.2	.	93	8.8
71	25.3	.	94	8.3
72	24.4	.	95	7.8
73	23.5	.	96	7.3
74	22.7	.	97	6.9
75	21.8	.	98	6.5
76	20.9	.	99	6.1
77	20.1	.	100	5.7
78	19.2	.	101	5.3
79	18.4	.	102	5.0
80	17.6	.	103	4.7
81	16.8	.	104	4.4
82	16.0	.	105	4.1
83	15.3	.	106	3.8
84	14.5	.	107	3.6
85	13.8	.	108	3.3
86	13.1	.	109	3.1
87	12.4	.	110	2.8
88	11.8	.	111	2.6
89	11.1	.	112	2.4
90	10.5	.	113	2.2
91	9.9	.	114	2.0
92	9.4	.	115 and older	1.8

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