Plan For Retirement

There have been several developments in the retirement area over the last couple of years. The changes are the result of legislation passed in 2001 and in new distribution rules published by the Internal Revenue Service in 2002.

New Distribution Rules:

The new regulations changed several things when it came to making distributions after an individual reaches age 70-1/2. One of the most important changes was the adoption of a new table for calculating how much needed to be distributed. This table is based on joint life expectancies of an individual and someone ten years younger than the account owner. This is the table that everyone uses, except married couples where one spouse is more than 10 years younger than the other. In that case you will use the actual joint lives table for the appropriate ages.

This change is important because it reduces the amount that is required to be distributed each year in the form of mandatory distributions. If you are receiving distributions, you need to make sure that you are receiving amounts under the new table and not the old elections you filed with the company running your plan.

Changes in contributions to retirement plans:

The law change in 2001 set in motion a series of changes in the amount that you can set aside for your retirement. The listing below compares the 2002 and 2003 amounts for the different retirement plans or category.

Retirement Plan Definitional Changes provide other savings opportunities for the self- employed or small business owner.

For example, a change in the definition of compensation, which allows the company to include deferral amounts to 401(k) plans, creates an opportunity for greater deductions for the self-employed.