Part IV. Items — Internal Revenue Bulletin 2001-10

incorrectly lists the year 2001 inflationadjusted limit under § 7872(g)(2) as $144,111. Section 7872(g)(5)(A) of the Code requires any increase in the dollar amount of this inflation adjustment to be rounded to the nearest multiple of $100. Accordingly, the corrected year 2001 inflation-adjusted limit under § 7872 (g)(2) contained in Table 1 of Rev. Rul. 2000–56 is $144,100. The principal author of this announcement is Courtney Shepardson of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this announcement, contact Ms. Shepardson at (202) 622-3940 (not a toll-free call).

New Simplified Rules for Minimum Required Distributions

Announcement 2001–23

The Service announces supplements to Publication 575, Pension and Annuity Income, and Publication 590, Individual Retirement Arrangements, that take into account proposed regulations (REG–130477–00; REG–130481–00) substantially simplifying the calculation of minimum required distributions from qualified plans, IRAs, and other related retirement savings vehicles.

Supplement to Publication 575, Pension and Annuity Income

New Simplified Rules for Minimum Required Distributions

After Publication 575 was printed, the IRS issued new rules that simplify how minimum required distributions will be figured after 2001. For 2001, the minimum required distribution can be figured using either these new rules or the old rules explained in Publication 575, Pension and Annuity Income . For most people, the new simplified rules will result in lower minimum required distributions.

If you are age 70 1/2 or older and participate in a qualified retirement plan or if you are the beneficiary of such a plan, you may be subject to an additional tax if the

Model Amendment for Retirement Plans for Proposed Regulations Under Section 401(a)(9)

Announcement 2001–18

Proposed regulations under § 401(a)(9) of the Internal Revenue Code, relating to required minimum distributions from retirement plans, were published in the Federal Register on January 17, 2001 (the 2001 Proposed Regulations). The 2001 Proposed Regulations are proposed to be effective for distributions for calendar years beginning on or after January 1, 2002. The preamble to the 2001 Proposed Regulations states that taxpayers may rely on regulations under § 401(a)(9) that were proposed in 1987 (the 1987 Proposed Regulations) or on the 2001 Proposed Regulations “[f]or determining required minimum distributions for calendar year 2001.” For this purpose, distributions for calendar year 2001 do not include a distribution that is required to be made by April 1, 2001, for calendar year 2000, such as for an IRA owner or retired qualified plan participant who attains age 70 1/2 in 2000. To determine the amount of such a distribution (as in the case of other distributions for calendar years prior to 2001), taxpayers may rely on the 1987 Proposed Regulations.

The preamble to the 2001 Proposed Regulations contains a model amendment for qualified plan sponsors to adopt if they wish to follow the 2001 Proposed Regulations in making distributions for 2001 and subsequent calendar years. The first sentence of the model amendment, as published in the Federal Register on January 17, 2001, referred to distributions made in calendar years beginning on or after January 1, 2000, but was intended to refer instead to distributions made for calendar years beginning on or after January 1, 2001. A correction notice is being submitted to the Office of the Federal Register. The 2001 Proposed Regulations (REG–130477–00 and REG–130481–00), as corrected, will be published in Internal Revenue Bulletin 2001–11 dated March 12, 2001. The correct model amendment reads as follows:

Model Amendment

“With respect to distributions under the Plan made for calendar years beginning on or after January 1, 2001 (ALTERNA- TIVELY, SPECIFY A LATER CALEN- DAR YEAR FOR WHICH THE AMENDMENT IS TO BE INITIALLY EFFECTIVE) , the Plan will apply the minimum distribution requirements of section 401(a)(9) of the Internal Revenue Code in accordance with the regulations under section 401(a)(9) that were proposed on January 17, 2001, notwithstanding any provision of the Plan to the contrary. This amendment shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under section 401(a)(9) or such other date as may be specified in guidance published by the Internal Revenue Service.”

Qualified plan sponsors that wish to follow the 2001 Proposed Regulations in making distributions for 2001 and subsequent calendar years should adopt the corrected model amendment as set forth above in lieu of the model amendment as published in the preamble to the 2001 Proposed Regulations in the Federal Register on January 17, 2001. A plan sponsor that adopted the model amendment as published in the Federal Register on January 17, 2001, should amend its plan to substitute the corrected model amendment set forth above for the model amendment that was previously adopted.

CPI Adjustment for Below- Market Loans for 2001; Correction

Announcement 2001–19

As published, Rev. Rul. 2000–56, 2000–52 I.R.B. 597, which lists the inflation-adjusted amounts that a taxpayer may lend to a qualified continuing care facility without incurring imputed interest under § 7872(g) of the Internal Revenue Code for years 1987- 2001, contained a numerical error. Table 1 of Rev. Rul. 2000–56

2001–10 I.R.B. 791 March 5, 2001

amount distributed annually by the plan is less than the minimum required distribution for the year. This additional tax applies to distributions from qualified employee plans, qualified employee annuity plans, section 457 deferred compensation plans, tax-sheltered annuity plans, and individual retirement arrangements (IRAs). The additional tax is discussed in Publication 575 beginning on page 30.

If your required beginning date is April 1, 2001 (either because you attained age 70 1/2 or retired in 2000), and you are taking your minimum required distribution for 2000 by April 1, 2001, do not use the new rules for figuring the distribution for 2000. Instead, use the old rules in Publication 575. Use the new rules for figuring the required distribution for 2001 that must be made by the end of 2001.

For detailed information about the new rules, see the proposed regulations published in the Federal Register on January 17, 2001, 66 F.R. 3928, and Announcement 2001–18 in this Bulletin. The corrected version of the proposed regulations will be in Internal Revenue Bulletin 2001–11 dated March 12, 2001. Distributions during the employee’s life- time. Under the new rules, minimum required distributions during your lifetime are based on a distribution period that can be determined using a single table and your age. The distribution period is not affected by your beneficiary’s age unless your sole beneficiary is your spouse who is more than 10 years younger than you are. In that case you can use a different table.

To figure the minimum required distribution for 2001, divide your account balance at the end of 2000 by the distribution period from the table. You can use the tables in Publication 590, Individual Retirement Arrangements (IRAs ), to determine the distribution period. This is the “applicable divisor” listed next to your age (as of your birthday in 2001) in the Table for Determining Applicable Divisor for MDIB ( Minimum Distribution Incidental Benefit) on page 80 of Publication 590, unless your sole beneficiary is your spouse who is more than 10 years younger than you are. In that case, use the number at the intersection of the ages of you and your spouse (as of your birthdays in 2001) in Table II (Joint and Last Survivor Expectancy) beginning on

page 76 of Publication 590. These rules also apply for figuring the minimum required distribution for 2001 for an employee who dies in 2001 after his or her required beginning date.

Distributions after the employee’s death. Under the new rules, if the designated beneficiary of the employee is an individual, such as the employee’s spouse or child, minimum required distributions for years after the year of the employee’s death are generally based on a distribution period that can be determined using the beneficiary’s single life expectancy. This rule applies whether or not the death occurred before the employee’s required beginning date. If the employee’s beneficiary is not an individual (for example, if the beneficiary is the employee’s estate), the rule for determining minimum required distributions for years after the employee’s death depends on whether or not the death occurred before the employee’s required beginning date.

If the employee’s designated benefi- ciary is an individual . To figure the minimum required distribution for 2001, divide the account balance at the end of 2000 by the distribution period. You can use Table I (Single Life Expectancy) in Publication 590 to determine the distribution period, as follows.

Spouse as sole designated beneficiary. The distribution period is the divisor listed in the table next to the spouse’s age (as of the spouse’s birthday in 2001). If the employee died before the year in which he or she attained age 70 1/2, distributions to the spouse need not begin until the year in which the employee would have attained age 70 1/2.
Other designated beneficiary. The distribution period is the divisor listed in the table next to the beneficiary’s age (as of his or her birthday in the year following the year of the employee’s death), reduced by one for each elapsed year since the year following the employee’s death.

If the employee’s designated benefi- ciary is not an individual. Determine the minimum required distribution for 2001 as follows.

Death on or after the required begin- ning date . Divide the account balance at the end of 2000 by the distribution period from Table I (Single Life Expectancy) on page 75 of Publication

The distribution period is the divisor listed next to the employee’s age (as of his or her birthday in the year of death), reduced by one for each elapsed year since the year of death.

Death before the required beginning date. The 5-year rule continues to apply. Under this rule, the entire account must be distributed by the end of the fifth year following the year of the employee’s death. No distribution is required for a year before that fifth year. This rule may also be elected by a beneficiary who is an individual.

Supplement to Publication 590, Individual Retirement Arrangements (IRAs)

New Simplified Rules for Minimum Required Distributions

After Publication 590 was printed, the IRS issued new rules that simplify how minimum required distributions will be figured after 2001. For 2001, you can figure the minimum required distribution using either these new rules or the old rules explained in Publication 590, Individual Retirement Arrangements (IRAs) . For most people, the new simplified rules will result in lower minimum required distributions.

If you are age 70 1/2 or older and own a traditional IRA or if you are the beneficiary of an IRA, you may be subject to an additional tax if you do not take annual distributions from the IRA of at least the minimum required distribution for the year. This is discussed in Publication 590 beginning on page 21, under When Must I Withdraw IRA Assets? (Required Distributions).

If you attained age 70 1/2 in 2000 and are taking your minimum required distribution for 2000 by April 1, 2001, do not use the new rules for figuring the distribution for 2000. Instead, use the old rules in Publication 590. Use the new rules for figuring the required distribution for 2001 that must be made by the end of 2001.

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required distributions during your lifetime are based on a distribution period that can be determined using a single table and your age. The distribution period is not affected by your beneficiary’s age unless your sole beneficiary is your spouse who is more than 10 years younger than you are. In that case, you can use a different table.

To figure the minimum required distribution for 2001, divide your account balance at the end of 2000 by the distribution period from the table. This is the “applicable divisor” listed next to your age (as of your birthday in 2001) in the Table for Determining Applicable Divisor for MDIB (Minimum Distribution Incidental Benefit) on page 80 of Publication 590, unless your sole beneficiary is your spouse who is more than 10 years younger than you are. In that case, use the number at the intersection of the ages of you and your spouse (as of your birthdays in 2001) in Table II (Joint and Last Survivor Expectancy) beginning on page 76 of Publication 590. These rules also apply for figuring the minimum required distribution for 2001 for an owner who dies in 2001 after his or her required beginning date. Distributions after the owner’s death. Under the new rules, if the designated beneficiary of the owner is an individual, such as the owner’s spouse or child, minimum required distributions for years after the year of the owner’s death generally are based on a distribution period that can be determined using the beneficiary’s single life expectancy. This rule applies whether or not the death occurred before the owner’s required beginning date. If the owner’s beneficiary is not an individual (for example, if the beneficiary is the owner’s estate), the rule for determining minimum required distributions for years after the owner’s death depends on whether or not the death occurred before the owner’s required beginning date.

If the owner’s designated beneficiary is an individual. To figure the minimum required distribution for 2001, divide the account balance at the end of 2000 by the distribution period from Table I (Single Life Expectancy) on page 75 of Publication 590. Determine the distribution period as follows.

Spouse as sole designated beneficiary. The distribution period is the divisor

listed in the table next to the spouse’s age (as of the spouse’s birthday in 2001). If the owner died before the year in which he or she attained age 70 1/2, distributions to the spouse need not begin until the year in which the owner would have attained age 70 1/2.

Other designated beneficiary. The distribution period is the divisor listed in the table next to the beneficiary’s age (as of his or her birthday in the year following the year of the owner’s death), reduced by one for each elapsed year since the year following the owner’s death.

If the owner’s beneficiary is not an individual. Determine the minimum required distribution for 2001 as follows.

Death on or after the required begin- ning date. Divide the account balance at the end of 2000 by the distribution period from Table I (Single Life Expectancy) on page 75 of Publication

The distribution period is the divisor listed next to the owner’s age (as of his or her birthday in the year of death), reduced by one for each elapsed year since the year of death.

Death before the required beginning date. The 5-year rule continues to apply. Under this rule, the entire account must be distributed by the end of the fifth year following the year of the owner’s death. No distribution is required for a year before that fifth year. This rule may also be elected by a beneficiary who is an individual.

Election to Treat Trust as Part of an Estate; Hearing

Announcement 2001–24

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Change of date of public hearing; extension of time to submit outlines of oral comments.

SUMMARY: This document changes the date of the public hearing on the proposed regulations (REG–106542–98, 2001–5 I.R.B. 473) that relate to an election to have certain revocable trusts treated and taxed as part of an estate. It also extends the time to submit outlines of oral comments for the hearing.

DATES: The public hearing will be held April 11, 2001, beginning at 10 a.m. Additional outlines of oral comments must be received by March 21, 2001.

ADDRESSES: The public hearing will be held in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. Send submissions to: Regulations Unit CC (REG–106542–98), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to: Regulations Unit CC (REG–106542–98), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington DC. Alternatively, taxpayers may submit outlines of oral comments electronically directly to the IRS Internet site at http://www.irs.gov/tax_regs/reglist.html.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Faith Colson, (202) 622-3060; concerning submissions, LaNita Van Dyke, (202) 6227190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

A notice of proposed rulemaking and notice of public hearing, appearing in the Federal Register on Monday, December 18, 2000 (65 F.R. 79015), announced that a public hearing on the proposed regulations relating to an election to have certain revocable trusts treated and taxed as part of an estate would be held on February 21, 2001, in the IRS Auditorium, Internal Revenue Building 1111 Constitution Avenue, NW., Washington, DC. Subsequently, the date of the public hearing has changed to April 11, 2001, at 10 a.m. in the IRS Auditorium. Outlines of oral comments must be received by March 21, 2001.

Cynthia Grigsby, Chief, Regulations Unit, Office of Special Counsel (Modernization & Strategic Planning).

(Filed by the Office of the Federal Register on February 7, 2001, 8:45 a.m., and published in the issue of the Federal Register for February 8, 2001, 66 F.R. 9535)

2001–10 I.R.B. 793 March 5, 2001