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COPYRIGHT 2001 SourceMedia, Inc.
The proposed regulations that the Internal Revenue Service issued earlier this year on distributions from traditional IRAs simplified the required minimum distribution rules during the IRA owner's lifetime and, in most situations, reduced the amount of required distributions.
In addition, however, the proposed regulations provide opportunities for planning to maximize the benefits to beneficiaries who inherit an IRA after the owner's death.
Under the proposed regulations (which may be relied on for distributions in 2001), the designated beneficiary is determined as of the end of the year after the year in which the IRA owner dies. Thus, a person who is a beneficiary when the owner dies, but who is not a beneficiary as of the end of the following year, is not taken into account for purposes of determining the period over which required minimum distributions have to be made.
Under the former proposed regulations, the designated beneficiary had to be determined on the date that the IRA owner was required to begin taking required minimum distributions, or if he died before that date, date of death.
In addition, if the IRA is divided into separate accounts, the new proposed regulations make it clear that the required minimum distribution rules apply separately to each account. While the former proposed regulations didn't specifically state whether an IRA could be split up into separate accounts,...
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