|
New IRA Rules — Generally Good
News
In January 2001, the IRS issued new rules for
individual retirement accounts (IRAs). The new rules are already
in effect, so you can use them for decisions and actions under
your IRA this year. Highlighting the
new rules:
 |
Generally, persons age
70-1/2 or older now have greater ability to defer
distributions from their IRAs. As a result, they have
a greater ability to defer income taxes.
|
|
The new rules have greatly simplified the
calculation of minimum required distributions. There is
one simplified distribution schedule that applies to almost
everyone. The one exception group, IRA owners who name
spouses more than 10 years younger than themselves as
the sole beneficiary, have an even more generous distribution
schedule.
|
|
A significant amount of flexibility has
been added to the distribution rules applicable to beneficiaries
once the IRA owner dies. For example, for IRA owners dying
after their “required beginning date” (the April 1 following
the calendar year in which they turn 70-1/2), the beneficiaries
have until December 31 of the year following the IRA owner’s
death to resolve distribution arrangements.
|
|
The rules related to trusts named as beneficiaries
have also been softened.
|
The new rules are generally good news for IRA
owners and beneficiaries. They also benefit the IRS. Calculations
have been made easier, and the IRA providers (banks, mutual
fund companies, etc.) will now be reporting minimum required
distributions to the IRS. This will make it easier for the IRS
to find those who fail to meet the minimum distribution requirements.
IRA Owners Who Died in
2000
It is very important that beneficiaries of IRAs
whose owners died in the year 2000 get early, solid advice.
The beneficiary flexibility of the new rules only lasts for
those IRAs until December 31, 2001.
Reminders
|
Make sure you have the documents showing
who your named IRA beneficiaries are.
|
|
Although the beneficiary rules are now more
flexible, it’s still very important to keep your beneficiary
naming up to date.
|
|
Contact your IRA provider(s) and ask them
for current information on your IRA and your choices under
the new rules.
|
|
If you have questions, get solid advice.
|
Additional Information
Additional information on IRA's can be found on
the following pages:
|
|
