The IRS has just issued new proposed regulations that greatly improve the ability of retirees to stretch out their IRA withdrawals. They take effect for IRA distributions for 2001 and for qualified retirement plan payouts beginning 2002. The previously complex rules surrounding withdrawals have been greatly simplified. The previous rules on minimum required distributions from IRAs were incomprehensible. Rather than having to decide between the term certain, recalculation, or hybrid method, the new rules assign a uniform life expectancy table.
Beneficiary decisions are no longer irrevocable .
For example, under the new rules, if your spouse predeceases you, you can choose a new beneficiary and use that person's life expectancy to calculate future minimum distributions. That's right, as far as the IRS is concerned, you're still alive for at least a year after you've died. This could allow heirs to further stretch out the collection of inherited IRA accounts. In effect, the IRS is giving you and your beneficiaries every opportunity to keep you IRA going for as long as possible after your demise and with the least possible tax complications. Withdrawals can be stretched out .