Understanding IRA and QRP Distribution Rules
In April 2002, the IRS finalized its rules regarding required minimum distributions
(RMDs). These regulations set forth standards requiring an actuarially determined
minimum amount be paid out of a QRP or IRA. A QRP is a qualified retirement plan for
self-employed persons and is sometimes called a "Keogh plan". In other words, these accounts
actually have to be used to fund retirement, and not just as a means of accumulating
great wealth to pass on to future generations. RMDs must begin being made no later
than the year following the year in which the account owner turns 70.5.
Determining the required minimum distributions is relatively simple. The account
balance is divided by the actuarially determined "distribution period." The distribution
period is determined by consulting one of two tables published by the IRS. The primary
table, labeled the "Uniform Lifetime Table" is used in most cases. To view this
table, click here. It is used anytime the
beneficiary named is not the account owner's spouse, or if the beneficiary is the
spouse and the spouse is no more than 10 years younger than the employee. The other
table, known as the "Joint and Last Survivor Table," is only used if the spouse
is more than 10 years younger than the account owner.
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