This Week's Topic: Withdrawals From Your IRA

As many of you who are 701/2 and older, lower IRA withdrawals are permitted this year resulting from the new IRS regulations issued in January allowing required distributions to be made over a longer period of time. The rule does not apply, however, for IRAs where withdrawals are based on the joint life of an IRA owner and a spouse who is ten years younger where the payout would remain the same. You are not required to use the new, more liberal rules; you can continue to use the old rules if you want. Just divide your December 31, 2000 balance by your life expectancy.

As for the new rules application, calculate your December 31, 2000 IRA balance(s) and dvide by the factor for your age found in Appendix E in IRS Publication 590. You do not need to withdraw from each IRA account. You can withdraw the required amount from any one IRA if you wish.

If you became 701/2 in 2001, you can wait until April 1, 2002 to withdraw the required amount, but if you wait then your 2002 withdrawal s will increase your taxable income because you will have two IRA withdrawals in 2002. Again, your April 1, 2002 delayed withdrawal will be based on your IRA balances as of December 31, 2000.