Fed Tax: "Treasury Simplifies IRA Regulations"
Please consult your tax advisors for details. Good luck.
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Treasury:
ftp.fedworld.gov
>>>[4830-01-u]
DEPARTMENT OF TREASURY
Internal Revenue Service (IRS)
26 CFR Parts 1 and 54
RIN 1545-AY69, 1545-AY70
[REG-130477-00;REG-130481-00]
Required Distributions from Retirement Plans
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking and notice of public hearing.
SUMMARY: This document contains proposed regulations relating to required minimum
distributions from qualified plans, individual retirement plans, deferred compensation
plans under section 457, and section 403(b) annuity contracts, custodial accounts, and
retirement income accounts.
These regulations will provide the public with guidance
necessary to comply with the law and will affect administrators of, participants in, and
beneficiaries of qualified plans; institutions that sponsor and individuals who administer
individual retirement plans, individuals who use individual retirement plans for retirement
income, and beneficiaries of individual retirement plans; and employees for whom
amounts are contributed to section 403(b) annuity contracts, custodial accounts, or
retirement income accounts and beneficiaries of such contracts and accounts.
DATES: Written and electronic comments must be received by April 19, 2001. Outlines
of topics to be discussed at the public hearing scheduled for June 1, 2001, at 10 a.m.
must be received by May 11, 2001.<<<
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The Post: "Treasury Simplifies IRA Regulations"
washingtonpost.com
Rearranged for emphasis & ease of reading.
>>>Treasury Simplifies IRA Regulations
By Albert B. Crenshaw
Washington Post Staff Writer
Wednesday, January 17, 2001 ; Page E02
In a move to simplify retirees' financial lives while perhaps improving tax collection, the Treasury Department has proposed a wholesale rewrite of the rules covering distributions from individual retirement accounts and other tax-favored retirement savings plans.
Though the rules are technically only proposals, the Internal Revenue Service says taxpayers may begin to apply them immediately.
The changes would rewrite rules, in use since 1987, that taxpayers and their advisers have found stunningly complex.
They also allow taxpayers or their heirs to correct mistakes or change retirement plans after they have begun taking required distributions.
The change adds flexibility for planning and "opens up a whole wealth of opportunities for people who made faulty elections in the past" and now realize they should be changed, said Eric Donner, president of Retirement Distributions Strategies Inc., a Summit, N.J., publishing and training company.
In KEY changes for IRA holders, the new regulations:
• Provide a single table to calculate the required minimum distribution that must be made from a retirement account during the owner's lifetime.
...This eliminates the need for the owner to choose a beneficiary by the date the distributions begin, as well as the need to decide whether to recalculate the owner's life expectancy each year.
... The table produces the smallest required minimum distribution allowed under the old rules.
• Permit the required minimum distribution to be calculated without regard to the beneficiary's age
...(except when distributions can be reduced by taking into account the age of a beneficiary's spouse who is more than 10 years younger; in that case, a different table and the spouse's actual age are used).
• Allow the named beneficiary to step aside in favor of another (such as a child or grandchild) as late as the end of the year following the account owner's death.
... Under current rules, beneficiaries are generally locked in after the owner reaches the age of 701/2.
• Permit post-death minimum distributions to take into account what remains of the owner's actuarial life expectancy, thus allowing distributions to be spread over more years.
The rules also require that the institutions where the accounts are held:
... calculate the required minimum distribution, and
... report it to the IRS.
The rules would not require owners of more than one account to actually take the required distribution from each account,
... only that they take the total required minimum, from whatever accounts they choose.
This change will relieve account owners of the burden of calculating distributions.
But it also means that the IRS will know how much IRA income to expect to see on the owner's tax return.
© 2001 The Washington Post <<< |
