NewRMD.Com Web Site

www.newrmd.com


Purpose

The purpose of this site is to provide technical and planning information on the Required Minimum Distributions rules for IRAs and qualified plans to practitioners and consumers.  For information on the Roth IRA, see the Roth IRA Web Site.  For information on Roth IRA Conversions, see the RothConversions.com Web Site.

Online Required Minimum Distributions Calculator (updated through 2011):
Click here for the NewRMD.Com Calculator
(updated for 2002 final regulations: uses the new tables)


News

Most non-spouse beneficiaries would lose the ability to stretch out their IRAs under a provision included in a transportation funding bill.  See the article, Congress May Crush Key Tool for IRA Inheritors, by Deborah Jacobs (Forbes, 2/8/12) and the pdf for the Description of the Chairman's Modification to the Proposals of the "Highway Investment, Job Creation and Economic Growth Act of 2012".  Senate leaders indicated on 2/17/12 that they would abandon the the IRA proposals in the transportation funding bill.

Required Minimum Distributions calculations are based on life expectancy tables that are updated every ten years.  The last time the tables were updated was April of 2002.  It is expected that the tables will be updated again in early 2012 (probably in April) resulting in new Required Minimum Distributions calculations.

In a Special Edition (January 2009) of the Employee Plans News (also released as IRS Notice 2009-9), the IRS discusses the new law that affects Required Minimum Distributions for 2009 stating that ...most participants and beneficiaries otherwise required to take minimum distributions...are not required to withdraw any amount in 2009.  The intriguing word is most which suggests that some may still be required to take a distribution.  We expect to see some IRS guidance on this in the future.  Generally, the 2009 waiver covers life-time Required Minimum Distributions to plan owners and after-death distributions to beneficiaries.  There are also special provisions for those taking under the five year rule when that five year period includes 2009 (generally covering distributions from plans with no designated beneficiary where the owner died in the years 2004 through 2008 before the Required Beginning Date)--that five year period becomes a six year period.  (Posted on 1/21/09)

The Treasury Department decided not to publish guidance making changes to the 2008 RMD rules.  (This is not the same as the changes found in H.R. 7327 as noted below.)  The perceived problem with the RMD rules stems from the fact that required distributions in 2008 are based on plan balances from 12/31/07 while the stock market has seen large declines in October and November of 2008.  The Treasury Department had apparently considered making some changes to the rules for 2008 Required Minimum Distributions, but decided against doing so.  (Posted on 12/12/08, updated 12/24/08)

Congress passed the following bill on 12/11/08 and it was signed into law by President Bush on 12/23/08:
H.R. 7327, The "Worker, Retiree, and Employer Recovery Act of 2008"
No Required Minimum Distribution would be required for calendar year 2009.  In other words, RMDs which are based on 12/31/2008 plan balances and are normally required to be made by 12/31/2009 (or by 4/1/2010 for those attaining age 70½ in 2009) would not have to be made.  (Posted on 12/12/08, updated 12/24/08)

Final regulations on required minimum distributions were published by the IRS on 4/17/02. The regulations include new life expectancy tables to be used to calculate required minimum distributions.  The new tables are mandatory for 2003 with 3 different required distribution methods allowable for 2002: the final regs with the new tables, the 2001 proposed regs with old tables, and the pre-2001 (1987 proposed regs) methods with old tables. The regulations may be viewed on a web page or viewed/downloaded in a pdf file.


Articles

Article submissions or requests for links to articles should be sent to info@newrmd.com.  Please indicate "NewRMD article" in the subject line of your e-mail.

Articles for the Planning Professional:

Title Description (date posted)
Congress May Crush Key Tool for IRA Inheritors Article by Deborah Jacobs, Forbes, 2/8/12.
Quote:
Senate Finance Chairman Max Baucus (D., Mont.) has recommended a provision that would limit the use of so-called stretch IRAs unless those accounts have been converted to a Roth.
Baucus' targeting of stretch IRAs a reach, say critics Article at Investment News, 2/7/12.
Quote:
“It would really change the whole playing field for retirement planning,” said Ed Slott, an IRA adviser in Rockville Centre, New York. “That would make things simpler, but it would really put a crimp in the whole legacy planning people do for IRAs.”
Distribution moratorium doomed Article by Jessica Toonkel Marquez, Investment News, 2/7/10.
Quote:
Bills introduced recently to give seniors another year's grace on required minimum distributions from retirement accounts won't get any traction in Congress, according to experts.
IRA Moves Article by Ashlea Ebeling, Forbes, 3/2/09.
Quote:
...Congress canceled 2009 RMDs for almost all accounts, including 401(k)s and inherited pretax and Roth IRAs.
Heir Alert Article by Ashlea Ebeling, Forbes, 2/11/09
Quote:
Have you inherited an individual retirement account from someone other than a spouse recently? Be careful, or the 2009 required minimum distribution holiday could cost your family dearly.
Required Minimum Distributions: Calculations under the Final Regulations Article by Patrick Matthews (Brentmark Web Site, 4/26/02).
Quote:
The 2002 final regulations added more than just a new mortality table to these calculations. They also added complexity.
An Outline of the New Proposed Regulations on Required Minimum Distributions Article by Greg Reymann (NewRMD.Com Web Site, 2/23/01).
Quote:
PRACTICE POINT: Make sure the designated beneficiary is able to designate an individual to receive the remaining lifetime payments after his or her death.
Note:
Article includes the uniform distribution table.
Required Minimum Distributions: Calculations under the New Rules Article by Patrick Matthews (Brentmark Web Site, 1/19/01).
Comments:
This article looks at the new rules from a calculation perspective. 

Articles in the Financial Press:

Title Description (date posted)
Disinherited by Vanguard Is it time to move your IRA?
(registration required)
Article by Ashlea Ebeling (Forbes, 9/3/07)
Quotes:
In late July the Vanguard group sent 170,000 customers a form letter innocuously labeled: "Change in beneficiary policy will help you simplify your planning." A more candid heading would have been: "Warning! Unless you act, we're about to change who gets your Individual Retirement Accounts when you die."
When FORBES showed Vanguard's letter to IRA experts, they were outraged. "This borders on the unconscionable," fumed Green Bay, Wis. CPA Robert Keebler. "It's crazy. I don't see how they can change the beneficiaries on your accounts without your consent,'' said Boston lawyer Natalie Choate.
Missed Your RMD Deadline? What To Do Article by Denise Appleby (Investopedia, 1/10/05)
Quote:
Failing to withdraw your RMD by the applicable deadline may result in you owing the IRS an excise tax of 50% of the RMD shortfall.
Note:
Another excellent article on this topic is RMD Shortfall? Dealing With The 50% Penalty by Mary Kay Foss in the March 2007 issue of Ed Slott's IRA Advisor.
New IRA Minimum Distributions Article by Kim Lankford (Kiplinger.com, 5/17/02)
Quote:
The latest set of rules will offer the lowest minimum distribution for most retirees...
Understanding IRAs Article by Neil Downing (Projo.com, 5/13/02)
Quote (by Ed Slott):
Most people who inherited an IRA before now are affected [by the new rules], and it could make a huge difference in how long the IRA stays alive. . . .
MoneyLine by Neil Downing: Untangling IRA rules can pay off in the end Article by Neil Downing (Projo.com, 4/30/02)
Quote:
For nearly 14 years, the rules and the tables stayed about the same. Then, within a period of about 15 months, the government changed the rules and tables -- twice.
MoneyLine by Neil Downing: IRS simplifies IRA restrictions Article by Neil Downing (Projo.com, 4/17/02)
Quote:
Good news for IRA owners: the IRS said yesterday that it is simplifying the rules you use to figure out how much you must withdraw from your traditional IRA.

Law & IRS

Title Description (date posted)
Temporary Waiver of Required Minimum Distributions Rules for Certain Retirement Plans and Accounts (sec. 201 of the bill and sec. 401(a)(9) of the Code) This is part of the Technical Explanation of H.R. 7327 which was prepared by the Staff of the Joint Committee on Taxation.  These are pages 24 to 27 which deal with the waiver of the RMD rules for 2009. (12/12/08)
Final Regulations on Required Minimum Distributions The final regulations on required minimum distributions are now available.  Click on the link to the left to view as an html web page or click here to download a 42-page Federal Register PDF file, finalrmdregs.pdf, 280K (be patient while download starts). This is a nice formatted version of the regs, but it has some mistakes in the Joint Life table.
Note: The 42-page PDF Federal Register file has some errors in the Joint Life table.  On p. 19016 of this PDF file, the values at the following locations are wrong (vertical age listed first):

25, 23: shows 77.2, but should be 66.2.

63, 22-29:  correct values should be 61.3, 60.3, 59.4, 58.4, 57.5, 56.5, 55.6, 54.6

The html page link to the above left also has the correct values. Also, the IRS has a 154-page PDF file with the correct values: td8987.pdf.

IRS Announcement 2001-23 The IRS issued this on 3/5/2001.  It announces supplements to IRS publications 575 and 590 on pensions and IRAs.  It is the IRS' most readable explanation of the new distribution rules.
Restated IRS Regulations including IRS Corrections These are the new IRS proposed regulations with the 2/20/01 wording corrections included.
Required Distributions from Retirement Plans; Correction The IRS issued wording corrections to the proposed regulations. (2/20/01).
IRS Regulations REG-130477-00 and REG-130481-00 These are the new IRS proposed regulations. (1/25/01).

Other Resources

Title Description
Consumer's Guide to the Retirement Distribution Rules Available at GuidetoRules.com is a $19.95 consumer's guide by Seymour Goldberg and Ed Slott.
Sy Goldberg's Planning Analysis: Working with the 2002 IRS Final Distribution Rules This detailed planning analysis of the rules is available for $49.
Ed Slott's IRA Advisor This excellent publication is only $125 for a one-year subscription including many back issues.
Brentmark Software Brentmark® has the following software products that handle the old and new Required Minimum Distributions rules:
Retirement Distributions Planner: $249
Retirement Plan Analyzer: $595

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Last Modified: February 20, 2012