Are there any changes affecting Required Minimum Distributions (RMD)s in the Internal Revenue Services April 17, 2002 release of the finalized regulations for IRAs?
A. The IRS first released its proposed regulations for IRAs and other qualified plans in January 2001. The final rules, released April 17, 2002, and effective as of January 1, 2003, generally keep last year’s simplifications and add some new elements, incorporating many suggestions that were made after the proposed regulations were released. (However, the section dealing with annuity payments has been substantially changed and was issued as a temporary regulation, giving taxpayers a chance to offer additional feedback.) The final rules make it easier for taxpayers to calculate their required minimum distribution (RMD), and, in general, reduce the resulting amount. This means that people can stretch out their payments – and enjoy the tax shelter – for a longer period of time. The final rules also address a number of aspects related to the designated beneficiary, but here we’ll focus on the new rules for RMD calculations. According to the Federal Register, IRA owners must begin taking an
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