Just saw a report on NBC nightly news about a change from the IRS concerning IRA's and 401k's. It did not explain very well and only mentioned "26 years to deplete rule". This is the first I have heard about this.Can anyone explain? My husband and I are 50 and are planning on retirement at 55.

Elle asks,

Just saw a report on NBC nightly news about a change from the IRS concerning IRA's and 401k's. It did not explain very well and only mentioned "26 years to deplete rule". This is the first I have heard about this.Can anyone explain? My husband and I are 50 and are planning on retirement at 55.

Here's a link detailing the proposed changes.

http://www.brentmark.com/newrmd.htm

intercst

Thanks for the link, intercst, but I must say the lingo there is about as clear as the Mississippi.

Could you clarify a bit? Thanks.

WOW, I agree pauleckler. It was as clear as mud!
I just spent the last 15 minutes trying to keep my eyes from going crossed from the legaleeze. I thought the IRS was going to make the tax rules easier to understand! Is that an oxymoron or what? All I could get out of the proposed rules pertain to either people over 70.5 or survivors of those who have passed on, of which I am neither. Maybe someone else can lift the fog!

Or at least provide a horn to warn others of the fog...

pauleckler asks,

Thanks for the link, intercst, but I must say the lingo there is about as clear as the Mississippi.

Could you clarify a bit? Thanks.

Here's a simplified explanation for those that don't speak "IRS".

http://www.irahelp.com/pr_011201.shtml

intercst

I saw the same report and had the same question. Maybe they were trying to imply that we don't have to start withdrawls from a traditional IRA at age 70? the report certainly was not clear, and haven't found anything else on it yet.
Chuck

The new rules for required minimum distributions(RMD) have done away with all of the dificult decisions that you had to make at 70.5 years and before your RBD,
April 1st. of the year following the year you turned 70.5. The owner of an IRA, 403b, 401k, 457, etc still has to start taking distributions by April 1st of the year following turning 70.5. How you determine the minimum distributions has been made easier because there is only one uniform life expectance table(MDIB) that everyone uses. All you need to know is your age and the balance in your accounts and you can calculate the RMD. For your 2001 RMD, you would divide your balance in your account, as of Dec.31, 2000 by your life expectancy from the MDIB table. The only expection to this is if you are married and your spouse is more than 10 years younger than you. You would then use the joint life expectancy of you and your spouse. You do not need to know your beneficiary at the RBD. The designated beneficiary of your plan is not final until Dec. 31st of the year following your death. This allows your estate to stretch out your distributions to the max. The beneficiary then can distribute the balance in your account over their life expectancy. There are more details, but these are the basics. See these web sites for more info.

www.irahelp.com Ed Slott's web site, very good
www.ataxplan.com Natalie Choate's site, very good
www.rothira.com Jim Lange's site
www.benefitlinks.com
www.fairmark.com
Hope this helps
glenn