Carney & Sugai, LLP - California Legislation

Simplified Required Distribution Rule for Retirement Plans

Proposed regulations have been issued by the Internal Revenue Service which govern required distributions from IRA's, TSA's, and qualified retirement plans. The proposed effective date of these regulations is January 1, 2002, although taxpayers may choose the old or new rules for distributions in 2001. While these changes have obvious impact on your retirement planning, they also provide better estate planning options, which were previously limited.

The calculation methods for minimum distributions during lifetime have been simplified. Minimum distributions must still begin in the year a participant turns 70, although technically the first distribution can be delayed until that April 1st following the year the participant reaches age 70. The distribution amount is calculated based upon the participant's age; and, in some cases, the age of the designated beneficiary.

The biggest changes come in the area of post-death distributions. The rules regarding the required distributions to the designated beneficiary from the plan after the participant's death have been simplified and provide greater flexibility. In addition, the rules surrounding qualification as a designated beneficiary have been relaxed, providing substantial planning opportunities. For example, it is now easier to name a trust as the designated beneficiary, subject to certain restrictions. Furthermore, a charity can now be named as a beneficiary of a certain portion of a retirement plan without violating the "individual only" requirement of a beneficiary designation. Disclaimers can also be used more effectively now for post-death estate planning without breaching the beneficiary designation provisions.

Our client Seminar will discuss these new rules in great detail, providing you with information regarding the new planning opportunities that are now available. As retirement plans often constitute a majority of an estate, we hope you will choose to attend this Seminar and learn ways to take advantage of the new beneficiary options.

	IRA Distributions Simplified Required Distribution Rule for Retirement Plans Proposed regulations have been issued by the Internal Revenue Service which govern required distributions from IRA's, TSA's, and qualified retirement plans. The proposed effective date of these regulations is January 1, 2002, although taxpayers may choose the old or new rules for distributions in 2001. While these changes have obvious impact on your retirement planning, they also provide better estate planning options, which were previously limited. The calculation methods for minimum distributions during lifetime have been simplified. Minimum distributions must still begin in the year a participant turns 70, although technically the first distribution can be delayed until that April 1st following the year the participant reaches age 70. The distribution amount is calculated based upon the participant's age; and, in some cases, the age of the designated beneficiary. The biggest changes come in the area of post-death distributions. The rules regarding the required distributions to the designated beneficiary from the plan after the participant's death have been simplified and provide greater flexibility. In addition, the rules surrounding qualification as a designated beneficiary have been relaxed, providing substantial planning opportunities. For example, it is now easier to name a trust as the designated beneficiary, subject to certain restrictions. Furthermore, a charity can now be named as a beneficiary of a certain portion of a retirement plan without violating the "individual only" requirement of a beneficiary designation. Disclaimers can also be used more effectively now for post-death estate planning without breaching the beneficiary designation provisions. Our client Seminar will discuss these new rules in great detail, providing you with information regarding the new planning opportunities that are now available. As retirement plans often constitute a majority of an estate, we hope you will choose to attend this Seminar and learn ways to take advantage of the new beneficiary options.