IRS Helps Again – Notice 2004-15

L1: IRS Helps Again – Notice 2004-15IRS helps again. On March 1, 2004 in Internal Revenue Bulletin: 2004-9, Notice 2004-15. TheIRS appears to have extended Revenue Ruling 2002-62 to non-qualified annuities. If correct, the flexibility of 89-25 and the various PLRs leading up to Revenue Ruling 2002-62 are now gone – for all plans.

The following segments were extracted from the Notice…
The IRS and Treasury believe that because these provisions were enacted for the same purpose it is appropriate to apply the same methods to determine whether a distribution is part of a series of substantially equal periodic payments. Therefore, taxpayers may use one of the methods set forth in Notice 89-25, as modified by Rev. Rul. 2002-62, to determine whether a distribution from a non-qualified annuity contract is part of a series of substantially equal periodic payments under 72(q)(2)(D).
First, an individual is not subject to the 72(t)(1) additional tax if (i) the payments are not substantially equal because the assets in the individuals account plan or IRA are exhausted, and (ii) the individual followed one of the prescribed methods of determining whether payments are substantially equal periodic payments. See Rev. Rul. 2002-62 2.03(a).
Second, an individual who begins receiving distributions in a year using either the fixed amortization or fixed annuitization method may switch to the minimum distribution method for the year of the switch, and all subsequent years, and the change will not be treated as a modification within the meaning of 72(t)(4). Any subsequent change, however, will be a modification for purposes of 72(t)(4). See Rev. Rul. 2002-62 2.03(b).
The IRS and Treasury believe that, when the provisions of 72 are intended to address different concerns with respect to the treatment of qualified and non-qualified annuities, it is appropriate to apply those provisions in a different manner. However, if the provisions of 72 are designed to achieve the same purpose whether or not the annuity is qualified or non-qualified, it is appropriate to apply that provision in the same manner to both qualified and non-qualified annuities.

Full text at http://www.irs.gov/irb/2004-09_IRB/ar09.html2004-03-08 13:13, By: Gfw, IP: [172.16.1.70]

L2: IRS Helps Again – Notice 2004-15 As is usual, the IRS took 2 1/2 pages to say what normal people would express in two sentences; maybe one.
TheBadger2004-03-08 13:39, By: TheBadger, IP: [172.16.1.70]