Magazine article The CPA Journal

Letters to the Editor

Magazine article The CPA Journal

Letters to the Editor

Article excerpt

In the article "New Minimum Distribution Rules for IRAs," October 2002, the last sentence in the paragraph titled "Starting Date" is incorrect. The 2003 RMD is based upon the value of the IRA at December 31, 2002, without any reductions.

Also, the article does not mention that when the designated owner is the spouse, the spouse may roll over the IRA and elect to treat it as the spouse's own IRA. If the spouse is under 70 1/2, the rules for the starting date shown elsewhere on the page are applicable. It's possible the spouse may be able to postpone distributions for many years. The spouse may also name new beneficiaries.

Myron Blatt CPA

Lockwood Pension Services, Inc.

Chappaqua, N.Y.

The writer is a member of the NYSSCPA Estate Planning Committee and the Taxation of Financial Institutions and Products Committee.

The Author Responds

The paragraph titled "Starting Date" incorrectly indicated that when an IRA owner who turned 70 1/2 in 2002 defers his first RMD to April 1, 2003, the 2003 RMD that must be taken by December 31, 2003, would be based on the value of the IRA account balance at December 31, 2002, reduced by the 2002 RMD taken April 1, 2003. The article as written was consistent with Proposed Treasury Regulations section 1.408-8, Q&A 6. However, the reader correctly points that the final regulations did not provide for this adjustment to the December 31, 2002, account balance. Hence, in the example he cites, the RMD for December 31, 2003, would be based on the account balance at December 31, 2002, without reduction for the 2002 RMD taken April 1,2003.

Additionally, an error appears in the second sentence of the paragraph entitled "Starting Date," which reads, "The first RMD required in the year when the owner becomes 701 and its amount is based upon the value of all IRAs as of December 31 of the year following the calendar year in which the owner turns 70 1/2." The word "following" should be "preceding." Note that the example immediately following is correct.

Regarding the second point, although the article was brief and intended to highlight the new minimum distribution rules, a recommendation was made in the section "Separate Accounts" to separate a surviving spouse's portion of an IRA with multiple beneficiaries by placing her interest into a new IRA or rolling it over into an existing IRA, thereby further postponing payouts. I believe Blatt and I are essentially "on the same page" on this issue.

Jack Angel CPA

ANDERSENALUMNI.NET

i wanted to let you know how www.andersenalumni.net has progressed since it was featured as your Website of the Month in August.

The website now has more than 5,000 members registered from all over the world. Each day 30 to 50 new members join. Several members have found new jobs from the "Job Posting" section, which currently has more than 200 jobs posted, and many members have commented that it has allowed them to reconnect with former colleagues that they had lost touch with for several years.

Jonathan Goldsmith

President, AndersenAlumni.net

REVIVING THE PROFESSION

Editor-in-Chief Robert Colson's column in August prompted some thoughtful responses from readers. We're pleased to publish one interesting perspective.

According to the Business Briefing Column of the August 31, 2002, edition of the [Ft. Lauderdale] Sun Sentinel, "A judge has given final approval to a $17.1 million settlement in a securities fraud lawsuit against Aviation Sales Co., and against its auditors, Arthur Andersen. Arthur Andersen denied any wrongdoing as it agreed to pay its share in the lawsuit settlement."

One of the world's foremost auditing firms, certified to express an opinion as to the "fairness of the representations" in its client's financial statements, cannot recognize its wrongdoing in the fulfillment of its professional obligation. …

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