The agency not known for being flexible, has proposed new regulations that will allow tax-deferred account holders to withdraw fewer dollars and distribute them to beneficiaries in more favorable ways than ever before.
For IRA holders who would prefer to keep their distributions to bare-bones levels, this is good news on two fronts: Lower withdrawals mean lower taxes, and a longer pay-out period allows you to keep your money in its account collecting interest.
Until now, IRA owners approached the government's magic age of 70-1/2 dreading the complicated calculation that determined their required minimum distributions. While the start age for withdrawals hasn't changed -- it remains 70-1/2 -- the formula for deriving monthly withdrawals has.
According to the new rules, most people will determine their distributions with a simplified formula that assumes a longer life expectancy. In cases where a spouse is more than 10 years younger than the account owner, a different table is used.
Other provisions call for more simplified post-death payouts. If a beneficiary was named prior to the account holder's death, the balance of the account can be paid out over the beneficiary's life expectancy. Also, beneficiaries can be named after the account owner's death.
