IRS Clarifies Minimum Distribution Rule Effective Date
Those distributions are to be calculated based on the 1987 proposed regulations, according to Announcement 2001-18.
Calendar Year Clarity
The proposed regulations were published in the Federal Register on January 17, 2001, and were proposed to be effective for distributions for calendar years beginning on or after January 1, 2002.
However, the preamble to the Proposed Regulations said that taxpayers could rely on regulations proposed in 1987 or on the 2001 proposal in determining the “required minimum distributions for calendar year 2001.”
However, the IRS notes that for this purpose, distributions for calendar year 2001 do not include a distribution that is required to be made by April 1, 2001 – for calendar year 2000. This would include IRA or qualified plan distributions to participants that reach age 70.5 in 2000. Those distributions should continue to be calculated based on the 1987 Proposed Regulations.
A model amendment for qualified plans was also included in the preamble to the 2001 Proposed Regulations that contained an error. The first sentence of the model amendment referred to distributions made in calendar years beginning on or after January 1, 2000 – but was intended to refer instead to distributions made for calendar years beginning on or after January 1, 2001.
A correction notice is being submitted to the Office of the Federal Register. The 2001 Proposed Regulations, as corrected, will be published in the Internal Revenue Bulletin.
A copy of the correct model amendment, and the IRS Announcement can be found at ftp://ftp.irs.ustreas.gov/pub/irs-drop/a-01-18.pdf .
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