Giant Leap for IRA Simplification
New proposed regulations issued by the Treasury Department offer to do away with the complicated task of calculating IRA distributions. No longer will taxpayers have to rely on complicated life expectancy tables, nor will beneficiaries have to be locked in forever.
The required distributions will henceforth be determined from a single tax table which produces the smallest required minimum distribution allowed under the old rules. With this simple change, the IRA account holder will be able to easily determine the required annual distribution, and the IRS will know what to expect as a minimum amount of taxable income from account holders who are receiving distributions.
The previous rule for calculating distributions that includes a reduction based on the age of a beneficiary's spouse who is more than 10 years younger will still apply.
Distributions after the death of an IRA account owner may now be spread over what remains of the owner's actuarial life expectancy.
Financial institutions and trustees maintaining IRA accounts will now be required to report minimum required distributions of all accounts to the IRS.
Taxpayers may begin applying the proposed regulations immediately.