Updated 2002 Rates

Age	Dist. Period	Approx %
70	27.4	3.65
71	26.5	3.77
72	25.6	3.91
73	24.7	4.05
74	23.8	4.20
75	22.9	4.37
76	22.0	4.55
77	21.2	4.72
78	20.3	4.93
79	19.5	5.13
80	18.7	5.35
81	17.9	5.59
82	17.1	5.85
83	16.3	6.13
84	15.5	6.45
85	14.8	6.76
86	14.1	7.09
87	13.4	7.46
88	12.7	7.87
89	12.0	8.33
90	11.4	8.77
91	10.8	9.26
92	10.2	9.80
93	9.6	10.42
94	9.1	10.99
95	8.6	11.63
96	8.1	12.35
97	7.6	13.16
98	7.1	14.08
99	6.7	14.93
100	6.3	15.87
101	5.9	16.95
102	5.5	18.18
103	5.2	19.23
104	4.9	20.41
105	4.5	22.22
106	4.2	23.81
107	3.9	25.64
108	3.7	27.03
109	3.4	29.41
110	3.1	32.26
111	2.9	34.48
112	2.6	38.46
113	2.4	41.67
114	2.1	47.62
115	1.9	52.63

For most people, decisions are stressful. The more complex the decision, the greater the stress. No wonder some of us put off making them.

In my opinion, there is a direct correlation between procrastination and permutations. Webster defines permutation as " any one of the combinations or changes in position within a group". By way of example, a married taxpayer approaching 70 ½ is faced with four different options for IRA required minimum distributions. The benefits of each option depend on a complex combination of events. I used to tell clients that the only way you could be sure that you made the best decision was looking back after you, eh, well, "fell from the perch", so to speak. The possibilities ran rampant.

The first article in this series was supposed to be on the IRA distribution rules. I procrastinated. In fact, I procrastinate on all these articles, and endure comments like "it was 3 degrees this morning…I read your Fall article?" I thought about skipping Winter and going right to Spring, but then I would probably be late on the Summer article.

But there are times when we benefit by waiting to the last minute. And this article is timely.* In fact, it is hot off the press thanks to the issuance on January 11, 2001 of the IRS's new IRA Distribution Rules (IRA distribution rules in REG-13047700 and REG-13048100). Although optional for 2001, and mandatory for 2002, they bring immediate tax benefits and are simple to understand (that is, by comparison to the old rules).

Here are the highlights:

• A simple uniform table is used for all IRA owners and the age of the beneficiary will not make any difference except for spouses who are more than 10 years younger. See the above schedule.
• We no longer have to decide between recalculation and term certain. The account owner uses recalculation in accordance with this schedule.
• We now can change beneficiaries with no affect on the required minimum distributions.

Each year, when you get ready to take your distribution, match your age on your birthday in that year to the chart, determine the corresponding denominator and then divide this into the prior year's ending market value. In most cases, it is that simple.

If you name a charity as beneficiary, no change...

If you name your spouse as beneficiary and decide to change your beneficiaries to your children, no change...

If you are single, no change...

If you fall from your perch, the beneficiary is determined within the first year after death.

The distributions at your death will generally be allowed over your remaining expectancy or the expectancy of a designated beneficiary, whichever period of time is greater. The following link will explain how the distribution schedule might change upon your death:

Required Minimum Distributions: Calculations under the New Rules

Now what happens if you have already made your election? You can take advantage of the new rules. It doesn't matter whether you made the election this year, or five years ago. In many instances, your required minimum distribution will now go down. Of course, if you need the money, there is no reason why you can't take out more than the required minimum. There is no penalty for withdrawals in excess of the minimum; just severe penalties for withdrawing less than the minimum. You will, however, have to pay income taxes sooner than later.

Well, enough permutations for today. I will now begin thinking about the Spring article. It will be a continuation of this topic, and I promised our web designer, Ellen, that it will be finished before the leaves come out …probably…but certainly before they fall off.

* Some might think too timely. There is one view that the new regs are not yet effective on the theory that President Bush's 1/20/2001 order blocking regulations issued by former President Clinton may also affect the IRS regs. Nevertheless, the worse case scenario is that the regs would be delayed, and when finally formalized, would be effective as of 1/1/2001.