IRA REQUIRED MINIMUM DISTRIBUTION - 6/04/01

In January 2001, the Internal Revenue Service (IRS) issued proposed regulations [Reg-130477-00 and Reg-130481-00] concerning the calculation of the required annual minimum distribution from a participant's traditional IRA or qualified retirement plan. The IRS had previously issued proposed regulations (never made final) on this topic in 1987.

IN GENERAL

Under the new proposed regulations, the required minimum distribution is generally calculated using the participant's attained age and a minimum distribution factor prescribed by the IRS.* The minimum distribution factor is based on the joint life expectancy of the participant and a theoretical beneficiary who is assumed to be exactly 10 years younger than the participant.

APPLICABLE DISTRIBUTION PERIOD TABLE

AGE:70 DIVISOR:26.2 AGE:71 DIVISOR:25.3 AGE:72 DIVISOR:24.4 AGE:73 DIVISOR:23.5 AGE:74 DIVISOR:22.7 AGE:75 DIVISOR:21.8 AGE:76 DIVISOR:20.9 AGE:77 DIVISOR:20.1 AGE:78 DIVISOR:19.2 AGE:79 DIVISOR:18.4 AGE:80 DIVISOR:17.6 AGE:81 DIVISOR:16.8 AGE:82 DIVISOR:16.0 AGE:83 DIVISOR:15.3 AGE:84 DIVISOR:14.5 AGE:85 DIVISOR:13.8 AGE:86 DIVISOR:13.1 AGE:87 DIVISOR:12.4 AGE:88 DIVISOR:11.8 AGE:89 DIVISOR:11.1 AGE:90 DIVISOR:10.5 AGE:91 DIVISOR:09.9 AGE:92 DIVISOR:09.4 AGE:93 DIVISOR:08.8 AGE:94 DIVISOR:08.3 AGE:95 DIVISOR:07.8 AGE:96 DIVISOR:07.3 AGE:97 DIVISOR:06.9 AGE:98 DIVISOR:06.5 AGE:99 DIVISOR:06.1 AGE:100 DIVISOR:5.7 AGE:101 DIVISOR:5.3 AGE:102 DIVISOR:5.0 AGE:103 DIVISOR:4.7 AGE:104 DIVISOR:4.4 AGE:105 DIVISOR:4.1 AGE:106 DIVISOR:3.8 AGE:107 DIVISOR:3.6 AGE:108 DIVISOR:3.3 AGE:109 DIVISOR:3.1 AGE:110 DIVISOR:2.8 AGE:111 DIVISOR:2.6 AGE:112 DIVISOR:2.4 AGE:113 DIVISOR:2.2 AGE:114 DIVISOR:2.0 AGE:115 AND OLDER DIVISOR:1.8
Example: An IRA participant, age 75 has $100,000 in the IRA as of December 31 of the prior year. The required minimum distribution for the current year would be $4,587.16 ($100,000 divided by 21.8).

SPOUSE MORE THAN 10 YEARS YOUNGER

If the participant's spouse is more than 10 years younger than the participant, and the spouse is the sole designated beneficiary of the account for the entire calendar year, the minimum distribution factor used in calculating the required distribution amount is determined in accordance with Reg. Sec. 1.72-9, using the values shown in Annuity Table VI.**

Example: An IRA participant, age 75, has $100,000 in the IRA as of December 31 of the prior year. His wife is age 63. The required minimum distribution for the current year would be $4,329.00 ($100,000 divided by 23.1, the Table VI factor for a participant age 75 and a spouse age 63).

* See Prop. Treas. Reg. Sec. 1.401(a) (9)-5, Q&A4(a)(2)(i). ** See Prop. Treas. Reg. Sec. 1.401(a) (9)-5, Q&A4(b).

Article Courtesy of Kettley Publishing

Copyright 2003 Sycamore Financial, Inc.