Washington -- Ending a four-year development process, the Internal Revenue Service and the Treasury Department have finalized regulations regarding minimum distribution rules for defined benefit plans.
The final rules, adopted this week, were initially issued as temporary regulations two years ago and complete an update-and-simplification process between the two agencies that began in 2000.
While the final regs roll over many of the temporary rules implemented in 2002, there were some modifications, including:
- Changes to address concerns of defined benefit plan sponsors and annuity issuers to provide more flexibility in annuity payment terms.
- Grandfathering governmental plan provisions that were in effect when the temporary regulations were published.
- Modifications to the defined contribution plan rules that would provide more flexibility in the establishment of separate accounts for beneficiaries following the death of a plan participant or IRA holder.
"This is great news for participants, employers and annuity providers because they now have final rules regarding required distributions from their retirement programs," said Gregory Jenner, acting assistant secretary for Tax Policy. "There is adequate flexibility in the rules to permit annuities that meet the different needs of retirees. The final rules reflect many of the comments we received from the public during the finalization process."The final regulations are effective Jan. 1, 2003, the same date used for the regulations applicable to defined contribution plans. However, until 2006, plans are only required to show that they exercised good faith in compliance.
A complete text of the new rules is available at http://www.treasury.gov
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