Washington (June 16, 2004) -- The Treasury and the Internal Revenue Service have finalized regulations regarding minimum distribution rules for defined-benefit plans and annuity products purchased with account balances in other types of qualified retirement plans and IRAs.


The move completes an update and simplification of the minimum distribution rules that began in 2000. The regulations were originally issued as proposed and temporary regulations in 2002.


The final regulations retain many rules from the temporary regulations, with some changes. For example, changes are included to address concerns of defined-benefit plan sponsors and annuity issuers to provide more flexibility in annuity payment terms. The regulations also generally grandfather governmental plan provisions that were in effect when the temporary regulations were published. They also include a modification to the defined contribution plan rules that will provide more flexibility in the establishment of separate accounts for beneficiaries following the death of a plan participant or IRA holder.


Most employers and annuity contract issuers will not need to adjust their plans or contract distribution options to comply with the regulations. For those plans or contracts that do need to be changed, there is a good-faith compliance period to do so.


-- WebCPA staff

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