HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

INCOME TAX

Rev. Rul. 2002–22, page 849.Gross income; transfers of property incident to divorce.A taxpayer who transfers interests in nonstatutory stockoptions and nonqualified deferred compensation to the taxpay-er’s former spouse incident to divorce is not required to includean amount in gross income upon the transfer. Rather, theformer spouse is required to include an amount in grossincome when the former spouse exercises the stock options orwhen the deferred compensation is paid or made available tothe former spouse. Rev. Rul. 87–112 clarified.

Rev. Rul. 2002–24, page 848.Low-income housing credit; satisfactory bond; “bondfactor” amounts for the period April through June. Thisruling announces the monthly bond factor amounts to be usedby taxpayers who dispose of qualified low-income buildings orinterests therein during the period April through June 2002.

Rev. Rul. 2002–25, page 904.Federal rates; adjusted federal rates; adjusted federallong-term rate and the long-term exempt rate. For pur-poses of sections 382, 1274, 1288, and other sections of theCode, tables set forth the rates for May 2002.

Rev. Rul. 2002–26, page 906.Special use value; farms; interest rates. The 2002 interestrates to be used in computing the special use value of farm realproperty for which an election is made under section 2032A ofthe Code are listed for estates of decedents.

EMPLOYEE PLANS

T.D. 8987, page 852.REG–108697–02, page 918.Final, temporary, and proposed regulations under section 401of the Code relate to required minimum distributions from quali-fied plans, section 457 plans, section 403(b) annuity plans,and retirement income accounts (IRAs).

Rev. Proc. 2002–21, page 911.Professional employer organizations; employee leasing;plan qualification. This procedure describes different optionsthat may be selected in order that certain defined contributionplans of professional employer organizations may avoid dis-qualification. Rev. Proc. 2002–6 modified.

Announcement 2002–49, page 919.This announcement extends the June 1, 2002, date, cited insections 4.01 and 4.05 of Rev. Proc. 2002–10 (2002–4 I.R.B.401), to October 1, 2002, for which existing instead of revisedmodel forms may be used to establish new IRAs, SEPs, andSIMPLE IRA plans.

EMPLOYMENT TAX

Notice 2002–31, page 908.This document provides the contents of a proposed revenueruling concerning the employment taxation and reporting ofnonqualified stock options and nonqualified deferred compen-sation transferred to a former spouse incident to a divorce.The notice also requests comments from the public about theproposed ruling.

(Continued on the next page)Finding Lists begin on page ii.

Bulletin No. 2002–19May 13, 2002

ADMINISTRATIVE

Rev. Proc. 2002–31, page 916.For purposes of section 1.148–10(a)(4) of the regulations, thisprocedure sets forth a safe harbor under which an issue of taxor revenue anticipation bonds will not be treated as outstandinglonger than is reasonably necessary to accomplish the govern-mental purposes of the bonds. This procedure applies to bondssold after May 13, 2002.

Announcement 2002–52, page 919.This announcement updates information concerning the filingof Form 8851, Summary of Archer MSAs. This informationis general in nature and does not affect the current filinginstructions for Form 8851 found in Rev. Proc. 2001–31(2001–1 C.B. 1170).

May 13, 2002 2002–19 I.R.B.

The IRS MissionProvide America’s taxpayers top quality service by helpingthem understand and meet their tax responsibilities and by

applying the tax law with integrity and fairness to all.

IntroductionThe Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly and may be obtained from theSuperintendent of Documents on a subscription basis. Bulletincontents are consolidated semiannually into Cumulative Bulle-tins, which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-stantive rulings necessary to promote a uniform application ofthe tax laws, including all rulings that supersede, revoke,modify, or amend any of those previously published in the Bul-letin. All published rulings apply retroactively unless otherwiseindicated. Procedures relating solely to matters of internalmanagement are not published; however, statements of inter-nal practices and procedures that affect the rights and dutiesof taxpayers are published.

Revenue rulings represent the conclusions of the Service onthe application of the law to the pivotal facts stated in the rev-enue ruling. In those based on positions taken in rulings to tax-payers or technical advice to Service field offices, identifyingdetails and information of a confidential nature are deleted toprevent unwarranted invasions of privacy and to comply withstatutory requirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautionedagainst reaching the same conclusions in other cases unlessthe facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.This part includes rulings and decisions based on provisions ofthe Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.This part is divided into two subparts as follows: Subpart A, TaxConventions and Other Related Items, and Subpart B, Legisla-tion and Related Committee Reports.

Part III.—Administrative, Procedural, andMiscellaneous.To the extent practicable, pertinent cross references to thesesubjects are contained in the other Parts and Subparts. Alsoincluded in this part are Bank Secrecy Act Administrative Rul-ings. Bank Secrecy Act Administrative Rulings are issued bythe Department of the Treasury’s Office of the Assistant Secre-tary (Enforcement).

Part IV.—Items of General Interest.This part includes notices of proposed rulemakings, disbar-ment and suspension lists, and announcements.

The first Bulletin for each month includes a cumulative index forthe matters published during the preceding months. Thesemonthly indexes are cumulated on a semiannual basis, and arepublished in the first Bulletin of the succeeding semiannualperiod, respectively.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

2002–19 I.R.B. May 13, 2002

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

Section 42.—Low-IncomeHousing Credit

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, page 904.

Low-income housing credit; satisfac-tory bond; “bond factor” amounts forthe period April through June. This rul-ing announces the monthly bond factoramounts to be used by taxpayers who dis-pose of qualified low-income buildings orinterests therein during the period of Aprilthrough June 2002.

Rev. Rul. 2002–24

In Rev. Rul. 90–70 (1990–2 C.B. 3),the Internal Revenue Service providedguidance to taxpayers concerning thegeneral methodology used by the Trea-sury Department in computing the bondfactor amounts used in calculating theamount of bond considered satisfactoryby the Secretary under § 42(j)(6) of theInternal Revenue Code. It furtherannounced that the Secretary would pub-lish in the Internal Revenue Bulletin atable of “bond factor” amounts for dispo-sitions occurring during each calendarmonth.

Rev. Proc. 99–11 (1999–1 C.B. 275)established a collateral program as analternative to providing a surety bond for

taxpayers to avoid or defer recapture ofthe low-income housing tax credits under§ 42(j)(6). Under this program, taxpayersmay establish a Treasury Direct Accountand pledge certain United States Treasurysecurities to the Internal Revenue Serviceas security.

This revenue ruling provides in Table1 the bond factor amounts for calculatingthe amount of bond considered satisfac-tory under § 42(j)(6) or the amount ofUnited States Treasury securities topledge in a Treasury Direct Accountunder Rev. Proc. 99–11 for dispositionsof qualified low-income buildings orinterests therein during the period Aprilthrough June 2002.

Table 1Rev. Rul. 2002–24

Monthly Bond Factor Amounts for Dispositions ExpressedAs a Percentage of Total Credits

Calendar Year Building Placed in Serviceor, if Section 42(f)(1) Election Was Made,

the Succeeding Calendar Year

Month ofDisposition 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Apr ’02 17.76 32.73 45.44 56.24 65.46 65.40 65.93 66.45 67.08 67.80 68.68

May ’02 17.76 32.73 45.44 56.24 65.46 65.23 65.76 66.27 66.91 67.62 68.50

Jun ’02 17.76 32.73 45.44 56.24 65.46 65.06 65.59 66.11 66.74 67.46 68.33

2002–19 I.R.B. 848 May 13, 2002

Table 1 (cont’d)Rev. Rul. 2002–24

Monthly Bond Factor Amounts for Dispositions ExpressedAs a Percentage of Total Credits

Calendar Year Building Placed in Serviceor, if Section 42(f)(1) Election Was Made,

the Succeeding Calendar Year

Month ofDisposition 1999 2000 2001 2002

Apr ’02 69.55 70.40 71.67 72.55

May ’02 69.38 70.24 71.51 72.55

Jun ’02 69.21 70.09 71.37 72.55

For a list of bond factor amountsapplicable to dispositions occurring dur-ing other calendar years, see: Rev. Rul.98–3 (1998–1 C.B. 248); Rev. Rul.2001–2 (2001–1 C.B. 255); and Rev. Rul.2001–53 (2001–46 I.R.B. 489). For dis-positions occurring during the periodJanuary through March 2002, see Rev.Rul. 2002–8 (2002–9 I.R.B. 564).

DRAFTING INFORMATION

The principal author of this revenueruling is Gregory N. Doran of the Officeof Associate Chief Counsel (Passthroughsand Special Industries). For further infor-mation regarding this revenue ruling, con-tact Mr. Doran at (202) 622–3040 (not atoll-free call).

Section 61.—Gross IncomeDefined

26 CFR 1.61–1: Gross income.(Also: § 83, 1041; 1.83–7, 1.1041–1T.)

Gross income; transfers of propertyincident to divorce. A taxpayer whotransfers interests in nonstatutory stockoptions and nonqualified deferred com-pensation to the taxpayer’s former spouseincident to divorce is not required toinclude an amount in gross income uponthe transfer. Rather, the former spouse isrequired to include an amount in gross

income when the former spouse exercisesthe stock options or when the deferredcompensation is paid or made available tothe former spouse.

Rev. Rul. 2002–22

ISSUES

(1) Is a taxpayer who transfers inter-ests in nonstatutory stock options andnonqualified deferred compensation tothe taxpayer’s former spouse incident todivorce required to include an amount ingross income upon the transfer?

(2) Is the taxpayer or the formerspouse required to include an amount ingross income when the former spouseexercises the stock options or when thedeferred compensation is paid or madeavailable to the former spouse?

FACTS

Prior to their divorce in 2002, A and Bwere married individuals residing in StateX who used the cash receipts and dis-bursements method of accounting.

A is employed by Corporation Y. Priorto the divorce, Y issued nonstatutorystock options to A as part of A’s compen-sation. The nonstatutory stock options didnot have a readily ascertainable fair mar-ket value within the meaning of§ 1.83–7(b) of the Income Tax Regula-tions at the time granted to A, and thus no

amount was included in A’s gross incomewith respect to those options at the timeof grant.

Y maintains two unfunded, nonquali-fied deferred compensation plans underwhich A earns the right to receive post-employment payments from Y. Under oneof the deferred compensation plans, par-ticipants are entitled to payments basedon the balance of individual accounts ofthe kind described in § 31.3121(v)(2)–1(c)(1)(ii) of the Employment Tax Regu-lations. By the time of A’s divorce fromB, A had an account balance of $100xunder that plan. Under the seconddeferred compensation plan maintainedby Y, participants are entitled to receivesingle sum or periodic payments follow-ing separation from service based on aformula reflecting their years of serviceand compensation history with Y. By thetime of A’s divorce from B, A had accruedthe right to receive a single sum paymentof $50x under that plan following A’s ter-mination of employment with Y. A’s con-tractual rights to the deferred compensa-tion benefits under these plans were notcontingent on A’s performance of futureservices for Y.

Under the law of State X, stock optionsand unfunded deferred compensationrights earned by a spouse during theperiod of marriage are marital propertysubject to equitable division between thespouses in the event of divorce. Pursuantto the property settlement incorporated

May 13, 2002 849 2002–19 I.R.B.

into their judgment of divorce, A trans-ferred to B (1) one-third of the nonstatu-tory stock options issued to A by Y, (2)the right to receive deferred compensa-tion payments from Y under the accountbalance plan based on $75x of A’saccount balance under that plan at thetime of the divorce, and (3) the right toreceive a single sum payment of $25xfrom Y under the other deferred compen-sation plan upon A’s termination ofemployment with Y.

In 2006, B exercises all of the stockoptions and receives Y stock with a fairmarket value in excess of the exerciseprice of the options. In 2011, A terminatesemployment with Y, and B receives asingle sum payment of $150x from theaccount balance plan and a single sumpayment of $25x from the other deferredcompensation plan.

LAW AND ANALYSIS

Section 1041 and the assignment ofincome doctrine

Section 1041(a) provides that no gainor loss is recognized on a transfer ofproperty from an individual to or for thebenefit of a spouse or, if the transfer isincident to divorce, a former spouse. Sec-tion 1041(b) provides that the propertytransferred is generally treated asacquired by the transferee by gift and thatthe transferee’s basis in the property is theadjusted basis of the transferor.

Section 1041 was enacted in part toreverse the effect of the Supreme Court’sdecision in United States v. Davis, 370U.S. 65 (1962), which held that the trans-fer of appreciated property to a spouse (orformer spouse) in exchange for therelease of marital claims was a taxableevent resulting in the recognition of gainor loss to the transferor. See H.R. Rep.No. 432, 98th Cong., 2d Sess. 1491(1984). Section 1041 was intended to“make the tax laws as unintrusive as pos-sible with respect to relations betweenspouses” and to provide “uniform Federalincome tax consequences” for transfers ofproperty between spouses incident todivorce, “notwithstanding that the prop-erty may be subject to differing stateproperty laws.” Id. at 1492. Congress thusintended that § 1041 would eliminate dif-fering federal tax treatment of propertytransfers and divisions between divorcing

taxpayers who reside in community prop-erty states and those who reside in non-community property states.

The term “property” is not defined in§ 1041. However, there is no indicationthat Congress intended “property” to havea restricted meaning under § 1041. To thecontrary, Congress indicated that § 1041should apply broadly to transfers of manytypes of property, including those thatinvolve a right to receive ordinary incomethat has accrued in an economic sense(such as interests in trusts and annuities).Id. at 1491. Accordingly, stock optionsand unfunded deferred compensationrights may constitute property within themeaning of § 1041. See also Balding v.Commissioner, 98 T.C. 368 (1992) (mari-tal rights to military pension treated asproperty under § 1041).

Although § 1041 provides nonrecogni-tion treatment to transfers betweenspouses and former spouses, whetherincome derived from the transferred prop-erty and paid to the transferee is taxed tothe transferor or the transferee dependsupon the applicability of the assignmentof income doctrine. As first enunciated inLucas v. Earl, 281 U.S. 111 (1930), theassignment of income doctrine providesthat income is ordinarily taxed to the per-son who earns it, and that the incidence ofincome taxation may not be shifted byanticipatory assignments. However, thecourts and the Service have long recog-nized that the assignment of income doc-trine does not apply to every transfer offuture income rights. See, e.g., Rubin v.Commissioner, 429 F.2d 650 (2d Cir.1970); Hempt Bros., Inc. v. United States,490 F.2d 1172 (3d Cir. 1974), cert.denied, 419 U.S. 826 (1974); Rev. Rul.80–198 (1980–2 C.B. 113). Moreover, incases arising before the effective date of§ 1041, a number of courts had concludedthat transfers of income rights betweendivorcing spouses were not voluntaryassignments within the scope of theassignment of income doctrine. See Meis-ner v. United States, 133 F.3d 654 (8th

Cir. 1998); Kenfield v. United States, 783F.2d 966 (10th Cir. 1986); Schulze v. Com-missioner, T.C.M. 1983–263; Cofield v.Koehler, 207 F. Supp. 73 (D. Kan. 1962).

In Hempt Bros., Inc. v. United States,the court concluded that the assignmentof income doctrine should not apply tothe transfer of accounts receivable by a

cash basis partnership to a controlled cor-poration in a transaction described in§ 351(a), where there was a valid busi-ness purpose for the transfer of theaccounts receivable together with theother assets and liabilities of the partner-ship to effect the incorporation of anongoing business. The court reasoned thatapplication of the assignment of incomedoctrine to tax the transferor in such cir-cumstances would frustrate the Congres-sional intent reflected in the nonrecogni-tion rule of § 351(a). Accordingly, thetransferee, not the transferor, was taxed asit received payment of the receivables. InRev. Rul. 80–198, the Service adopted thecourt’s position in Hempt Bros., but ruledthat the assignment of income doctrinewould nonetheless apply to transfers tocontrolled corporations where there was atax avoidance purpose.

Similarly, applying the assignment ofincome doctrine in divorce cases to taxthe transferor spouse when the transfereespouse ultimately receives income fromthe property transferred in the divorcewould frustrate the purpose of § 1041with respect to divorcing spouses. Thattax treatment would impose substantialburdens on marital property settlementsinvolving such property and thwart thepurpose of allowing divorcing spouses tosever their ownership interests in propertywith as little tax intrusion as possible.Further, there is no indication that Con-gress intended § 1041 to alter the prin-ciple established in the pre-1041 casessuch as Meisner that the application ofthe assignment of income doctrine gener-ally is inappropriate in the context ofdivorce.

Specific provisions governingnonstatutory stock options

Section 83(a) provides, in general, thatif property is transferred to any person inconnection with the performance of ser-vices, the excess of the fair market valueof the property over the amount, if any,paid for the property is included in thegross income of the person performingthe services in the first taxable year inwhich the rights of the person having thebeneficial interest in such property aretransferable or are not subject to a sub-stantial risk of forfeiture, whichever isapplicable. In the case of nonstatutorystock options that do not have a readily

2002–19 I.R.B. 850 May 13, 2002

ascertainable fair market value at the dateof grant, § 83 does not apply to the grantof the option, but applies to propertyreceived upon exercise of the option or toany money or other property received inan arm’s length disposition of the option.See § 83(e) and § 1.83–7(a).

Although a transfer of nonstatutorystock options in connection with a maritalproperty settlement may, as a factual mat-ter, involve an arm’s length exchange formoney, property, or other valuable con-sideration, it would contravene the gifttreatment prescribed by § 1041 to includethe value of the consideration in the trans-feror’s income under § 83. Accordingly,the transfer of nonstatutory stock optionsbetween divorcing spouses is entitled tononrecognition treatment under § 1041.

When the transferee exercises thestock options, the transferee rather thanthe transferor realizes gross income to theextent determined by § 83(a). Since§ 1041 was intended to eliminate differ-ing federal tax treatment for propertytransferred or divided between spouses inconnection with divorce in communityproperty states and in non-communityproperty states, § 83(a) is properlyapplied in the same manner in both con-texts. Where compensation rights areearned through the performance of ser-vices by one spouse in a communityproperty state, the portion of the compen-sation treated as owned by the non-earning spouse under state law is treatedas the gross income of the non-earningspouse for federal income tax purposes.Poe v. Seaborn, 282 U.S. 101 (1930).Thus, even though the non-employeespouse in a non-community property statemay not have state law ownership rightsin nonstatutory stock options at the timeof grant, § 1041 requires that the owner-ship rights acquired by such a spouse in amarital property settlement be given thesame federal income tax effect as theownership rights of a non-employeespouse in a community property state.Accordingly, upon the subsequent exer-cise of the nonstatutory stock options, theproperty transferred to the non-employeespouse has the same character and isincludible in the gross income of the non-employee spouse under § 83(a) to thesame extent as if the non-employee

spouse were the person who actually per-formed the services.

The same conclusion would apply in acase in which an employee transfers astatutory stock option (such as those gov-erned by § 422 or 423(b)) contrary to itsterms to a spouse or former spouse inconnection with divorce. The optionwould be disqualified as a statutory stockoption, see §§ 422(b)(5) and 423(b)(9),and treated in the same manner as othernonstatutory stock options. Section424(c)(4), which provides that a§ 1041(a) transfer of stock acquired onthe exercise of a statutory stock option isnot a disqualifying disposition, does notapply to a transfer of the stock option. SeeH.R. Rep. No. 795, 100th Cong., 2d Sess.378 (1988) (noting that the purpose of theamendment made to § 424(c) is to“clarif[y] that the transfer of stockacquired pursuant to the exercise of anincentive stock option between spouses orincident to divorce is tax free”).

CONCLUSION

Under the present facts, the interests innonstatutory stock options and nonquali-fied deferred compensation that A trans-fers to B are property within the meaningof §1041. Section 1041 confers nonrecog-nition treatment on any gain that A mightotherwise realize when A transfers theseinterests to B in 2002. Further, the assign-ment of income doctrine does not applyto these transfers. Therefore, A is notrequired to include in gross income anyincome resulting from B’s exercise of thestock options in 2006 or the payment ofdeferred compensation to B in 2011.When B exercises the stock options in2006, B must include in income anamount determined under § 83(a) as if Bwere the person who performed the ser-vices. In addition, B must include theamount realized from payments ofdeferred compensation in income in theyear such payments are paid or madeavailable to B. The same conclusionswould apply if A and B resided in a com-munity property state and all or some ofthese income rights constituted commu-nity property that was divided between Aand B as part of their divorce.

This ruling does not apply to transfersof property between spouses other than in

connection with divorce. This ruling alsodoes not apply to transfers of nonstatutorystock options, unfunded deferred compen-sation rights, or other future incomerights to the extent such options or rightsare unvested at the time of transfer or tothe extent that the transferor’s rights tosuch income are subject to substantialcontingencies at the time of the transfer.See Kochansky v. Commissioner, 92 F.3d957 (9th Cir. 1996). Transfers of certaintypes of property incident to divorce, thetax consequences of which are governedby a specific provision of the Code orregulations (for example, § 402, 408, 414,424, or 453B) are not affected by this rul-ing.

HOLDINGS

(1) A taxpayer who transfers interestsin nonstatutory stock options and non-qualified deferred compensation to thetaxpayer’s former spouse incident todivorce is not required to include anamount in gross income upon the transfer.

(2) The former spouse, and not the tax-payer, is required to include an amount ingross income when the former spouseexercises the stock options or when thedeferred compensation is paid or madeavailable to the former spouse.

PROSPECTIVE APPLICATION

The Service will apply § 7805(b) andassignment of income principles to treatincome as gross income of the transferorand not of the transferee if—

(i) The income is attributable to aninterest in nonstatutory stock options,unfunded deferred compensation rights,or other similar intangible property rights;

(ii) The options or rights were trans-ferred from one party to a divorce to theother party to the divorce;

(iii) The transfer was required by aprovision of an agreement or court order;

(iv) The provision was contained inthe agreement or order before November9, 2002; and

(v) (a) The agreement or court orderspecifically provides that the transferormust report gross income attributable tothe transferred interest, or

(b) It can be established to the sat-isfaction of the Service that the transferor

May 13, 2002 851 2002–19 I.R.B.

has reported the gross income for federalincome tax purposes.

EFFECT ON OTHER DOCUMENTS

Rev. Rul. 87–112 (1987–2 C.B. 207)which deals with the treatment of trans-fers of United States savings bondsbetween spouses or former spouses, isclarified by eliminating references toassignment of income principles. As soclarified, the ruling is reaffirmed respect-ing the application of § 454 and the regu-lations thereunder to the transfer and thedetermination of the transferee’s basis.

FURTHER INFORMATION

For further information or questionsregarding § 61 or 1041, contact EdwardSchwartz of the Office of Associate ChiefCounsel (Income Tax and Accounting) at(202) 622–4960. For further informationor questions regarding § 83, 402, 408,414, 422, 423, 424, or 453B, contactErinn Madden of the Office of the Asso-ciate Chief Counsel (Tax Exempt andGovernment Entities) at (202) 622–6030.These are not toll-free calls.

Section 83.—PropertyTransferred in ConnectionWith Performance of Services

26 CFR 1.83–7: Taxation of nonqualified stockoptions.

A taxpayer who transfers interests in nonstatu-tory stock options and nonqualified deferred com-pensation to the taxpayer’s former spouse incidentto divorce is not required to include an amount ingross income upon the transfer. Rather, the formerspouse is required to include an amount in grossincome when the former spouse exercises the stockoptions or when the deferred compensation is paidor made available to the former spouse. See Rev.Rul. 2002–22, page 849.

Section 280G.—GoldenParachute Payments

Federal short-term, mid-term, and long-termrates are set forth for the month of May 2002. SeeRev. Rul. 2002–25, page 904.

Section 382.—Limitation onNet Operating LossCarryforwards and CertainBuilt-In Losses FollowingOwnership Change

The adjusted applicable federal long-term rate isset forth for the month of May 2002. See Rev. Rul.2002–25, page 904.

Section 401.—QualifiedPension, Profit-Sharing, andStock Bonus Plans

26 CFR 1.401(a)–2: Impossibility of diversionunder qualified plan or trust.

A revenue procedure describes limited relieffrom disqualification for certain defined contribu-tion retirement plans maintained by ProfessionalEmployer Organizations. See Rev. Proc. 2002–21,page 911.

26 CFR 1.401(a)(9)–1: Minimum distributionrequirement in general.

T.D. 8987

DEPARTMENT OF TREASURYInternal Revenue Service26 CFR Parts 1, 54, and 602

Required Distributions FromRetirement Plans

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Final and temporary regula-tions.

SUMMARY: This document containsfinal and temporary regulations relatingto required minimum distributions fromqualified plans, individual retirementplans, deferred compensation plans undersection 457, and section 403(b) annuitycontracts, custodial accounts, and retire-ment income accounts. These regulationswill provide the public with guidancenecessary to comply with the law and willaffect administrators of, participants in,and beneficiaries of qualified plans; insti-tutions that sponsor and individuals whoadminister individual retirement plans,individuals who use individual retirementplans for retirement income, and benefi-

ciaries of individual retirement plans; andemployees for whom amounts are con-tributed to section 403(b) annuity con-tracts, custodial accounts, or retirementincome accounts and beneficiaries ofsuch contracts and accounts. The text ofthe temporary regulations also serves asthe text of the proposed regulations setforth in the notice of proposed rulemak-ing on this subject in the Proposed Rulessection of the Federal Register.

EFFECTIVE DATE: These regulationsare effective January 1, 2003.

FOR FURTHER INFORMATION CON-TACT: Cathy A. Vohs, 202–622–6090(Not a toll free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collections of information con-tained in these final regulations have beenreviewed and approved by the Office ofManagement and Budget in accordancewith the Paperwork Reduction Act (44U.S.C. 3507) under control number1545–0996, in conjunction with thenotice of proposed rulemaking publishedon July 27, 1987, 52 FR 28070, REG-EE–113–82 (1987–2 C.B. 881), RequiredDistributions From Qualified Plans andIndividual Retirement Plans, under con-trol number 1545–1466 for Third-PartyDisclosure Requirements in IRS Regula-tions, and control number 1545–1573, inconjunction with the notice of proposedrulemaking published on December 30,1997, 62 FR 67780, REG–209463–82(1998–1 C.B. 376), Required Distribu-tions from Qualified Plans and IndividualRetirement Plans. Responses to the col-lections of information under controlnumbers 1545–0996 and 1545–1466 aremandatory. Responses to the collection ofinformation under control number 1545–1573 are required to obtain the benefit ofa trust being treated as a designated ben-eficiary under a retirement plan.

An agency may not conduct or spon-sor, and a person is not required torespond to, a collection of informationunless the collection of information dis-plays a valid control number assigned bythe Office of Management and Budget.

2002–19 I.R.B. 852 May 13, 2002

The estimated annual burden perrespondent under control number 1545–0996 is 1 hour.

The estimated annual burden perrespondent under control number 1545–1466 is 9 minutes.

The estimated annual burden perrespondent under control number 1545–1573 is 20 minutes.

Comments concerning the accuracy ofthis burden estimate and suggestions forreducing this burden should be sent to theInternal Revenue Service, Attn: IRSReports Clearance Officer, W:CAR:MP:FP:S Washington, DC 20224, and tothe Office of Management and Budget,Attn: Desk Officer for the Department ofthe Treasury, Office of Information andRegulatory Affairs, Washington, DC20503.

Books or records relating to this col-lection of information must be retained aslong as their contents may become mate-rial in the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential, asrequired by 26 U.S.C. 6103.

Background

This document contains amendmentsto the Income Tax Regulations (26 CFRPart 1) and to the Pension Excise TaxRegulations (26 CFR Part 54) under sec-tions 401, 403, 408, and 4974 of theInternal Revenue Code of 1986 (Code).These amendments conform the regula-tions to section 634 of the EconomicGrowth and Tax Relief Reconciliation Actof 2001 (EGTRRA) (115 Stat. 117), sec-tion 1404 of the Small Business Job Pro-tection Act of 1996 (SBJPA) (110 Stat.1791), sections 1121 and 1852 of the TaxReform Act of 1986 (TRA of 1986) (100Stat. 2464 and 2864), sections 521 and713 of the Tax Reform Act of 1984 (TRAof 1984) (98 Stat. 865 and 955), and sec-tions 242 and 243 of the Tax Equity andFiscal Responsibility Act of 1982(TEFRA) (96 Stat. 521). The regulationsprovide guidance on the minimum distri-bution requirements under section401(a)(9) for plans qualified under sec-tion 401(a) and for other arrangementsthat incorporate the section 401(a)(9)rules by reference. The section 401(a)(9)rules are incorporated by reference in sec-tions 408(a)(6) and (b)(3) for individualretirement accounts and annuities (IRAs)

(including Roth IRAs, except as providedin section 408A(c)(5)), section 403(b)(10)for section 403(b) annuity contracts, andsection 457(d) for eligible deferred com-pensation plans.

For purposes of this discussion of thebackground of the regulations in this pre-amble, as well as the explanation of pro-visions below, whenever the termemployee is used, it is intended to includenot only an employee but also an IRAowner.

Section 401(a)(9) provides rules fordistributions during the life of theemployee in section 401(a)(9)(A) andrules for distributions after the death ofthe employee in section 401(a)(9)(B).Section 401(a)(9)(A)(ii) provides that theentire interest of an employee in a quali-fied plan must be distributed, beginningnot later than the employee’s requiredbeginning date, in accordance with regu-lations, over the life of the employee orover the lives of the employee and a des-ignated beneficiary (or over a period notextending beyond the life expectancy ofthe employee and a designated benefi-ciary).

Section 401(a)(9)(C) defines requiredbeginning date for employees (other than5-percent owners and IRA owners) asApril 1 of the calendar year following thelater of the calendar year in which theemployee attains age 70½ or the calendaryear in which the employee retires. For5-percent owners and IRA owners, therequired beginning date is April 1 of thecalendar year following the calendar yearin which the employee attains age 70½,even if the employee has not retired.

Section 401(a)(9)(D) provides that(except in the case of a life annuity) thelife expectancy of an employee and theemployee’s spouse that is used to deter-mine the period over which paymentsmust be made may be redetermined, butnot more frequently than annually.

Section 401(a)(9)(E) provides that theterm designated beneficiary means anyindividual designated as a beneficiary bythe employee.

Section 401(a)(9)(G) provides that anydistribution required to satisfy the inci-dental death benefit requirement of sec-tion 401(a) is a required minimum distri-bution.

Section 401(a)(9)(B)(i) provides that,if the employee dies after distributions

have begun, the employee’s interest mustbe distributed at least as rapidly as underthe method used by the employee.

Section 401(a)(9)(B)(ii) and (iii) pro-vides that, if the employee dies beforerequired minimum distributions havebegun, the employee’s interest must beeither: distributed (in accordance withregulations) over the life or life expect-ancy of the designated beneficiary withthe distributions beginning no later than 1year after the date of the employee’sdeath, or distributed within 5 years afterthe death of the employee. However,under section 401(a)(9)(B)(iv), a surviv-ing spouse may wait until the date theemployee would have attained age 70½ tobegin taking required minimum distribu-tions.

Comprehensive proposed regulationsunder section 401(a)(9) were previouslypublished in the Federal Register onJanuary 17, 2001 (REG–130477–00/REG–130481–00, 2001–1 C.B. 865 [66FR 3928]) and July 27, 1987 (EE–113–82, 1987–2 C.B. 881 [52 FR 28070]). Theproposed regulations published in 2001substantially simplified the rules fordetermining required minimum distribu-tions for separate accounts provided inthe 1987 proposed regulations. The publicreaction to this simplification was veryfavorable. Consequently, these final regu-lations adopt the simplified rules in the2001 proposed regulations for separateaccounts , with the modif icat ionsdescribed below in the Explanation ofProvisions. These regulations continue toincorporate, with some modifications,applicable previously issued guidance(i.e., Notice 83–23 (1983–2 C.B. 418),Notice 88–38 (1988–1 C.B. 524), Notice96–67 (1996–2 C.B. 235), and Notice97–75 (1997–2 C.B. 337)). To the extentnot modified or superceded by these regu-lations, the guidance in Notice 83–23 andNotice 97–75 remains in effect. Forexample, if an employer uses the samerequired beginning date for all employeesregardless of whether the employee hasretired by age 70½, during the periodbefore an employee retires, the employeemay determine the portion of any distri-bution that is eligible for rollover usingthe statutory definition of required begin-ning date.

With respect to annuity payments, the2001 proposed regulations retained the

May 13, 2002 853 2002–19 I.R.B.

basic structure of the 1987 proposed regu-lation. The preamble to the 2001 pro-posed regulations indicated that the IRSand Treasury were continuing to studythese rules and specifically requestedupdated comments on current practicesand issues relating to required minimumdistributions from annuity contracts.Commentators provided information onthe variety of annuity contracts beingdeveloped and available as insurancecompany products for purchase withseparate accounts. In response to thecomments received, temporary regula-tions under § 1.401(a)(9)–6T signifi-cantly expand the situations in whichannuity payments under annuity contractspurchased with an employee’s benefitmay provide for increasing payments.These regulations are being issued in pro-posed (REG–108697–02) and temporaryform rather than final form in order togive taxpayers an opportunity to com-ment on these changes.

Explanation of Provisions

Uniform Lifetime Table

These final regulations retain the sim-plifications to the minimum distributionrules for separate accounts provided inthe 2001 proposed regulations, includingthe calculation of the required minimumdistribution during the individual’s life-time using a uniform table. The basic cal-culation for individual accounts providesthat the required minimum distribution isdetermined by dividing the account bal-ance by the distribution period. For life-time required minimum distributions,there is a uniform distribution period foralmost all employees of the same age.The uniform lifetime distribution periodtable is based on the joint life and lastsurvivor expectancy of an individual anda hypothetical beneficiary 10 yearsyounger. However, if the employee’s solebeneficiary is the employee’s spouse andthe spouse is more than 10 years youngerthan the employee, a longer distributionperiod measured by the joint life and lastsurvivor life expectancy of the employeeand spouse is permitted to be used.

For years after the year of the employ-ee’s death, the distribution period is gen-erally the remaining life expectancy ofthe designated beneficiary. The beneficia-ry’s remaining life expectancy is calcu-

lated using the age of the beneficiary inthe year following the year of theemployee’s death, reduced by one foreach subsequent year. If the employee’sspouse is the employee’s sole beneficiary,the distribution period during the spouse’slife is the spouse’s single life expectancy.For years after the year of the spouse’sdeath, the distribution period is thespouse’s life expectancy calculated in theyear of death, reduced by one for eachsubsequent year. If there is no designatedbeneficiary, the distribution period is theemployee’s life expectancy calculated inthe year of death, reduced by one for eachsubsequent year.

New Mortality Tables

The 2001 proposed regulations pro-vided that the life expectancies for pur-poses of section 401(a)(9) would bedetermined using the expected returnmultiples set forth in the regulationsunder section 72 that are used for otherpurposes under the Code. These tables,based upon the experience reflected in the1983 individual annuity mortality table(without load), were adopted for purposesof section 72 in 1986 and had been usedin both the 1987 proposed regulations andthe 2001 proposed regulations under sec-tion 401(a)(9).

Section 634 of EGTRRA instructed theSecretary of Treasury to modify the lifeexpectancy tables used for purposes ofthe minimum distribution rules to reflectcurrent life expectancy. In accordancewith that instruction, the final regulationsadopt new tables of life expectancies tobe used for determining required mini-mum distributions.

The new tables were derived by start-ing with the basic 2000 individual annu-ity mortality table and projecting mortal-ity improvement for the period 2000through 2003 using the assumed mortalityimprovement factors that were adopted indeveloping the Annuity 2000 mortalitytable. The resulting mortality rates wereblended using a fixed 50% male 50%female blend. The uniform lifetime tableprovided in these final regulations hasalso been adjusted to reflect these newmortality tables.

These new tables also may be used todetermine an employee’s (or IRA own-er’s) life expectancy, or the joint life andlast survivor expectancy of an employee

(or IRA owner) and designated benefi-ciary, for purposes of calculating theamount of substantially equal periodicpayments under section 72(t)(2)(A)(iv)when applying a method permitted underA–12 of Notice 89–25 (1989–1 C.B. 662,666). One of these methods allows use ofthe methodology underlying the mini-mum distribution calculations for separateaccounts in which the account balance inthe prior year is divided by life expect-ancy or joint life and last survivor expect-ancy. Under this method, the paymentsare not equal but are treated as substan-tially equal if the life expectancy is deter-mined in a consistent manner. A series ofsubstantially equal periodic paymentsunder section 72(t)(2)(A)(iv) determinedunder this methodology will not be con-sidered to have been modified merelybecause the new tables are used in thefuture to determine the annual periodicpayments rather than the tables in theregulations under section 72.

Determination of the DesignatedBeneficiary

The 2001 proposed regulations pro-vided that, generally, the designated ben-eficiary is determined as of the end of theyear following the year of the employee’sdeath. Thus, any beneficiary eliminatedby distribution of the beneficiary’s benefitor through disclaimer during the periodbetween the employee’s death and the endof the year following the year of death isdisregarded in determining the employ-ee’s designated beneficiary for purposesof calculating required minimum distribu-tions. If, as of the end of the year follow-ing the year of the employee’s death, theemployee has more than one designatedbeneficiary and the account or benefit hasnot been divided into separate accounts orshares for each beneficiary, the benefi-ciary with the shortest life expectancy isthe designated beneficiary. Further, if aperson other than an individual is a ben-eficiary as of that date, the employee istreated as not having a beneficiary(except as provided below with respect totrusts).

Commentators applauded the basicprinciple of the approach in the 2001 pro-posed regulations but suggested that thedesignated beneficiary determinationshould be made before the end of the yearfollowing the year of death so that there

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will be adequate time to calculate and dis-tribute the required minimum amountbetween the date the beneficiary determi-nation is finalized and the end of the yearfollowing the year of the employee’sdeath (i.e., the date that required mini-mum distributions to nonspouse desig-nated beneficiaries must commence). Inresponse to these comments, the date fordetermining the designated beneficiaryhas been changed to September 30 of theyear following the year of the employee’sdeath. In response to comments, thesefinal regulations clarify that in order for abeneficiary to disclaim entitlement to abenefit for purposes of section 401(a)(9),the disclaimer must satisfy section 2518.Finally, the final regulations clarify that ifa designated beneficiary dies during theperiod between the employee’s date ofdeath and September 30 of the year fol-lowing the year of the employee’s death,the individual continues to be treated asthe designated beneficiary for purposes ofdetermining the distribution period ratherthan the successor beneficiary.

Some commentators requested thatfinal regulations provide that, if theemployee’s estate was named as the ben-eficiary in the beneficiary designation orthe employee’s estate became beneficiaryby operation of law, the beneficiary of theestate or the beneficiary of the IRAnamed under the employee’s will couldreplace the estate as beneficiary by Sep-tember 30 of the year following the yearof death. This change is not beingadopted in these final regulations. Theperiod between death and the beneficiarydetermination date is a period duringwhich beneficiaries can be eliminated butnot replaced with a beneficiary not desig-nated under the plan as of the date ofdeath. In order for an individual to be adesignated beneficiary, any beneficiarymust be designated under the plan ornamed by the employee as of the date ofdeath.

These regulations retain the rule in theproposed regulations that, in determiningan employee’s beneficiaries for purposesof applying the multiple beneficiary ruleor determining if the employee’s spouseis the employee’s sole beneficiary, allbeneficiaries of the employee’s interest inthe plan, including contingent beneficia-ries, are taken into account. The regula-tions also retain the exception to this rule

under which, if a beneficiary (subsequentbeneficiary) is entitled to any portion ofan employee’s benefit only if anotherbeneficiary dies before the entire benefitto which that other beneficiary is entitledhas been distributed by the plan, the sub-sequent beneficiary will not be consid-ered a beneficiary. However, these regula-tions clarify that the exception from themultiple beneficiary rules for death con-tingencies only applies to a person whocould be entitled to a portion of theemployee’s benefit by becoming the suc-cessor to the interest of one of theemployee’s beneficiaries after that benefi-ciary’s death. The regulations provide thatthis rule does not apply to a person whohas any right (including a contingentright) to an employee’s benefit beyondbeing a mere potential successor to theinterest of one of the employee’s benefi-ciaries upon that beneficiary’s death.Thus, for example, if one beneficiary hasa right to any income on an employee’sindividual account during that beneficia-ry’s life and another beneficiary has aright to the principal but only after thedeath of the income beneficiary (with anyportion of the principal distributed duringthe life of the income beneficiary to beheld in trust until that beneficiary’sdeath), both beneficiaries must be takeninto account in determining the benefi-ciary with the shortest life expectancy andwhether only individuals are beneficia-ries.

Default Rule for Post-death Distributions

These regulations, as did the 2001 pro-posed regulations, provide that, if anemployee dies before the employee’srequired beginning date and the employeehas a designated beneficiary, then thel ife expectancy rule in sect ion401(a)(9)(B)(iii) (rather than the 5-yearrule in section 401(a)(9)(B)(ii)) is thedefault distribution rule. Thus, absent aplan provision or election of the 5-yearrule, the life expectancy rule applies in allcases in which the employee has a desig-nated beneficiary, and the 5-year ruleapplies if the employee does not have adesignated beneficiary. This is a changefrom the position in the 1987 proposedregulations that provided the 5-year ruleas the default unless the spouse was thesole beneficiary. Commentators pointedout that, as a result of the default rule

under the 1987 regulations, some benefi-ciaries did not commence distributionsunder the life expectancy rules. Inresponse to those comments, these finalregulations provide a transition rule thatpermits beneficiaries subject to the 5-yearrule under the 1987 proposed regulationsto switch to the life expectancy rule, pro-vided that all amounts that would havebeen required to be distributed under anapplication of the life expectancy rule aredistributed by the earlier of December 31,2003 or the end of the 5-year period fol-lowing the year of the employee’s death.

Temporary Rules for Defined BenefitPlans and Annuity Contracts

These temporary regulations provide anumber of changes to the annuity rulesprovided in the 2001 proposed regula-tions including changes designed to makethe rules more consistent with the rulesfor individual accounts and reflect newproduct designs. In order to allow taxpay-ers to comment on these changes, the sec-tion of the regulations governing definedbenefit plans and annuities is being issuedas temporary and proposed regulationsrather than final regulations.

In response to comments, the follow-ing changes are being made. First, annu-ity payments are permitted to be providedfor a period certain that is as long as theperiod under the uniform lifetime tablefor the employee’s age in the year inwhich the annuity starting date occurs,regardless of who is the employee’s des-ignated beneficiary. Further, the perioddoes not change upon the death of theemployee even if the remaining periodcertain is longer or shorter than the ben-eficiary’s single life expectancy. Thesame rule applies if the annuity alsoincludes a life annuity or a joint and sur-vivor annuity. If the employee’s sole des-ignated beneficiary is the employee’sspouse, if the spouse is more than 10years younger than the employee, and ifthe annuity is only for a period certainand does not have a life contingent ele-ment, the period certain can be as long asthe joint life and last survivor expectancyof the employee and the employee’sspouse.

These temporary regulations retain therules in the 2001 proposed regulationsinterpreting the minimum distributionincidental benefit requirement. Under

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these rules, if the survivor of a joint andsurvivor annuity is not the employee’sspouse and if the survivor annuitant ismore than 10 years younger than theemployee, then the survivor portion mustbe less than 100% of the employee’s ben-efit. In such a case, the survivor annuitymust be reduced so that it does notexceed the employee’s benefit multipliedby the percentage provided in the table inthe regulations. However, the regulationsclarify that if the joint and survivor annu-ity also has a period certain, the reductionin survivor annuity is only required afterexpiration of the period certain.

Further, in response to comments, thetemporary regulations make a number ofchanges that expand the situations inwhich increasing annuity payments arepermitted. The additional situations aregenerally only available to annuities pur-chased from insurance companies.

Under these temporary regulations, anannuity purchased from an insurancecompany can increase annually by a con-stant percentage, provided that the initialpayment is sufficiently large that the totalexpected payments, determined withoutregard to these increases, exceed theaccount value being annuitized. Thisminimum payment requirement, togetherwith the adverse economic interests of theinsurer and the annuity purchaser, effec-tively limits the constant percentageincrease under an annuity to the assumedinterest rate used in pricing the annuity.

These temporary regulations also pro-vide explicit rules relating to the pay-ments of dividends under participatingannuity contracts. Under the temporaryregulations, a variation in the amount ofthe annuity payment (referred to as a divi-dend or other payment resulting fromfavorable actuarial experience) can bemade provided that: (1) the initial pay-ment meets the minimum thresholddescribed above, (2) actuarial experienceis measured at least annually, and (3) theresulting dividend payment or other pay-ment is either paid no later than the yearfollowing the year for which the actuarialexperience is measured or is payable inthe same form as the payment of theannuity over the remaining period of theannuity. These requirements are intendedto preclude backloading of the distribu-tion stream through the use of conserva-tive pricing assumptions where actuarial

gains with respect to those assumptionsare deferred and paid at a later date. Thedefinition of dividend or other paymentresulting from actuarial gain is broadenough to encompass the contractualadjustment provided for in a variableannuity. Accordingly, the rules that per-mitted payments that vary with the invest-ment performance of underlying assetshave been replaced with this more generalconstruct.

The temporary regulations allow fulland partial withdrawals from purchasedannuities in certain circumstances. Therestrictions on these withdrawals areintended to preclude the use of a with-drawal or cash-out feature as a mecha-nism to distribute deferred actuarial gains.In the case of a full withdrawal (includinga death benefit), the distribution must notexceed the expected future paymentsunder the contract, taking into account theannuitants who are still alive and anyremaining period certain, but withoutregard to any future increases. In the caseof a partial withdrawal, the full with-drawal under the terms of the contractmust satisfy the preceding sentence and,after the partial withdrawal, all futureannuity payments must be reduced pro-portionately based on the ratio of the par-tial withdrawal to the maximum with-drawal under the terms of the contract.

As discussed above, these permittedincreases are only available for insurancecompany products and not a distributionstream provided from a section 401(a)defined benefit trust. In addition, thesetemporary regulations do not permitannuity payments that vary with the valueof the underlying assets of the plan to beprovided by a defined benefit plan with asection 401(a) qualified trust. Further,these regulations clarify that an annuityunder a defined benefit plan with a sec-tion 401(a) qualified trust is permitted toprovide that annuity payments mayincrease with an annual percentageincrease that does not exceed the percent-age increase in a cost-of-living index thatis based on prices of all items and issuedby the Bureau of Labor Statistics. Finally,the temporary regulations clarify thatincreases in these annuity payments toreflect benefit increases must be pursuantto a plan amendment increasing benefits.

The preamble to the 2001 proposedregulations indicated that the IRS and

Treasury were continuing to considerwhether retention of the rule allowing anemployee’s minimum required distribu-tions under a defined benefit plan to bedetermined using the rules for individualaccounts was appropriate for defined ben-efit plans. Few comments specificallyrequested retention of this rule. As aresult, the IRS and Treasury have con-cluded that this rule has little applicationoutside of being used to determine theportion of a lump sum distribution of anemployee’s vested accrued benefit that iseligible for rollover. Accordingly, thisrule has not been retained in these tempo-rary regulations except for use in deter-mining the amount that is eligible for roll-over when a defined benefit plan pays anemployee’s entire vested accrued benefitin a lump sum. However, in response tocomments, these temporary regulationspermit a plan to treat the amount of a yearof annuity payments that would havebeen payable under the normal form asthe minimum required distribution for ayear in the case of a lump sum payment.

Finally, in response to a comment,these temporary regulations clarify thatactuarial increases to benefits under adefined benefit plan required under sec-tion 401(a)(9)(C)(iii), as added bySBJPA, need not be provided for anyperiod before January 1, 1997.

Incidental Benefit Requirement

These final and temporary regulationsprovide rules relating to the interaction ofthe section 401(a)(9) requirements andthe incidental benefit requirement of§ 1.401–1(b)(1)(i). Under these rules,generally if distributions with respect toan employee’s benefit satisfy the mini-mum distribution incidental benefitrequirement under these regulations, thedistribution will be deemed to satisfy anyrequirement for distributions under theincidental benefit requirements of§ 1.401–1(b)(1)(i). However, if a planprovides for certain post-retirement ancil-lary death benefits or a section 403(b)contract includes an undistributed pre-1987 account, the employee’s benefitsmust continue to satisfy the distributionrequirements of the incidental benefitrequirement of § 1.401–1(b)(1)(i), deter-mined without regard to these regulations.

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Existing revenue rulings continue to pro-vide guidance with respect to the applica-tion of the incidental benefit requirementsto permissible nonretirement benefitssuch as life, accident, or health benefits.

Trust as Beneficiary

The final regulations retain the provi-sion in the proposed regulations allowingan underlying beneficiary of a trust to bean employee’s designated beneficiary forpurposes of determining required mini-mum distributions when the trust isnamed as the beneficiary of a retirementplan or IRA, provided that certainrequirements are met. One of theserequirements is that documentation of theunderlying beneficiaries of the trust beprovided to the plan administrator or IRAtrustee, custodian, or issuer. In the case ofindividual accounts, unless the lifetimedistribution period for an employee ismeasured by the joint life expectancy ofthe employee and the employee’s spouse,the deadline under these regulations forproviding the beneficiary documentationis October 31 of the year following theyear of the employee’s death, rather thanthe end of the year following the year ofthe employee’s death as provided underthe 2001 proposed regulations.

This deadline for providing the trustdocumentation is coordinated with thedeadline for determining the employee’sdesignated beneficiary. Amendments tothe 1987 proposed regulations publishedin 1997 eliminated the requirement thatthe trust be irrevocable before death.Commentators indicated that some ben-eficiaries would have qualified for alonger distribution period as a result ofthis change except for the fact that theyhad not provided the required documenta-tion by the deadline provided in the regu-lations, which, in some cases, was a datebefore the regulation was published. Con-sequently, the commentators requestedthat final regulations provide a transitionperiod for providing this documentation.In response to these comments, theseregulations provide that, if the date forproviding this documentation is beforeOctober 31, 2003, the documentation ispermitted to be provided to the planadministrator (or IRA trustee, custodian,or issuer) until October 31, 2003.

Commentators asked for clarificationas to whether an election by a revocable

trust to be treated as part of an estateunder section 645 causes the trust to betreated as an estate for purposes of sec-tion 401(a)(9). On this point, the IRS andTreasury intend that a revocable trust willnot fail to be a trust for purposes of sec-tion 401(a)(9) merely because the trustelects to be treated as an estate under sec-tion 645, as long as the trust continues tobe a trust under state law.

Separate Accounts

Several commentators requested clari-fication concerning when an employee’sindividual account can be divided intoseparate accounts that are permitted tosatisfy section 401(a)(9) separately andconcerning whether separate accountscould also provide for separate invest-ments. In response to these comments,these final regulations provide that sepa-rate accounts with different beneficiariesunder the plan can be established at anytime, either before or after the employee’srequired beginning date. However, thefinal regulations provide that the separateaccounts are recognized for purposes ofdetermining required minimum distribu-tions only after the later of the year of theemployee’s death (whether before or afterthe required beginning date) and the yearthe separate accounts are established. Inaddition, the final regulations clarify that,in order to determine the distributionperiod for the separate account by disre-garding the beneficiaries of the otherseparate account, the separate accountmust be established no later then the endof the year following the year of theemployee’s death.

The separate accounting must allocateall post-death investment gains and lossesfor the period prior to the establishmentof the separate accounts on a pro ratabasis in a reasonable and consistent basisamong the separate accounts for the dif-ferent beneficiaries. The separateaccounting must also allocate any post-death distribution to the separate accountof the beneficiary receiving that distribu-tion. Once the separate accounts areestablished, the final regulations permitthe separate accounting to provide forseparate investments for each separateaccount.

Elimination of Optional Forms of Benefit

Some commentators requested reliefunder section 411(d)(6) for the elimina-tion of optional forms of benefit that wereneeded to satisfy section 401(a)(9) underthe 1987 proposed regulations but that areno longer needed to satisfy these finalregulations. For defined contributionplans, this relief generally is not neededbecause paragraph (e) of A–2 of§ 1.411(d)–4 gives broad authority toemployers to amend their defined contri-bution plan to eliminate installment pay-out options as long as the right to a lumpsum option payable at the same time ispreserved. These final regulations alsoprovide that , pursuant to section411(d)(6)(B), a plan will not fail to satisfysection 411(d)(6) merely because the planis amended to eliminate the availability ofan optional form of benefit to the extentthat the optional form does not satisfysection 401(a)(9). However, the IRS andTreasury invite public comment if addi-tional relief under section 411(d)(6) isneeded in order for defined benefit plansto satisfy section 401(a)(9).

Election of Surviving Spouse to Treat anInherited IRA as Spouse’s Own IRA

These final regulations generally retainthe clarifications in the 2001 proposedregulations regarding how and when asurviving spouse of a deceased IRAowner can elect to treat an IRA inheritedby the surviving spouse from that owneras the spouse’s own IRA. The 1987 pro-posed regulations provided that this elec-tion is deemed to have been made if thesurviving spouse contributes to the IRAor does not take the required minimumdistribution for a year under section401(a)(9)(B) as a beneficiary of the IRA.Under the 2001 proposed regulations, thisdeemed election is permitted to be madeonly after the distribution of the requiredminimum amount for the account, if any,for the year of the individual’s death.These final regulations provide that theelection can be made at any time after theIRA owner’s date of death, while clarify-ing that the minimum required distribu-tion for the calendar year of the IRA’sowner’s death is determined assuming theIRA owner lived throughout the year.These regulations also clarify that the sur-viving spouse is required to receive a

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minimum distribution for the year of theIRA owner’s death only to the extent thatthe amount required was not distributedto the owner before death.

Some commentators raised concernsabout the other clarifications in the 2001proposed regulations. The 2001 proposedregulations clarified that a deemed elec-tion is permitted only if the spouse is thesole beneficiary of the account and has anunlimited right to withdraw from theaccount. This requirement is not satisfiedif a trust is named as beneficiary of theIRA, even if the spouse is the sole benefi-ciary of the trust. As explained in the2001 preamble, these clarifications makethe election consistent with the underly-ing premise that the surviving spousecould have received a distribution of theentire decedent IRA owner’s account androlled it over to an IRA established in thesurviving spouse’s own name as IRAowner.

If the spouse actually receives a distri-bution from the IRA, the spouse is per-mitted to roll that distribution over within60 days into an IRA in the spouse’s ownname to the extent that the distribution isnot a required distribution, regardless ofwhether or not the spouse is the sole ben-eficiary of the IRA owner. Further, if thedistribution is received by the spousebefore the year that the IRA owner wouldhave been 70½, no portion of the distribu-tion is a required minimum distributionfor purposes of determining whether it iseligible to be rolled over by the survivingspouse.

IRA Reporting of Required MinimumDistributions

The 2001 proposed regulationsrequired the trustee, custodian, or issuerof an IRA to report the amount of therequired minimum distribution from theIRA at the time and in the manner pro-vided under additional guidance issued bythe IRS and applicable IRS forms andinstructions. A significant number ofcommentators objected to the requirementthat the amount of the required minimumdistribution for a year be reported becauseof concerns that the number may be inac-curate in certain cases. After thoroughconsideration of these comments and con-sultation with interested parties, the finalregulations continue to provide authority

to the Service to determine the extent towhich the trustee, custodian, or issuer ofan IRA must report information withrespect to the required minimum distribu-tion from that IRA through guidance ofgeneral applicability as well as forms andpublications.

In conjunction with these final regula-tions a notice is being published thatspecifies the reporting requirements thatapply. Beginning in 2004, trustees, custo-dians, and issuers must identify to theIRS on Form 5498 each IRA for which aminimum distribution is required to bemade to an IRA owner. The trustee, cus-todian, or issuer does not need to reportthe amount of the required distribution tothe IRS. However, the trustee, custodian,or issuer of such an IRA, must provideadditional information regarding the IRAto the IRA owner required to receive aminimum required distribution, beginningwith the minimum required distributionfor 2003. The trustee, custodian, or issuerof the IRA either must report the amountof the required minimum distribution forthe IRA to the IRA owner, or must advisethe IRA owner that a minimum distribu-tion with respect to the IRA is requiredfor the year, offer to calculate the amountof the required minimum distribution forthe IRA owner upon request, and then, ifrequested, calculate the amount and pro-vide it to the IRA owner. Although thedelegation of authority in the regulationsto require reporting would permit report-ing to be required with respect to requiredminimum distributions to beneficiaries,no reporting is required with respect tobeneficiaries at this time.

The reporting provisions in the 2001proposed regulations, these final regula-tions, and the notice being published areintended to assist taxpayers in complyingwith the minimum distribution require-ment. However, the Treasury and the IRScontinue to have concerns about the over-all level of compliance in this area andintend to monitor the effect of the newreporting regime on compliance to deter-mine whether it would be appropriate tomodify the regime in the future.

Calculation Simplification

In response to comments that there aretoo many variables that might changeduring a distribution calendar year for an

accurate calculation of the required mini-mum distribution for the year by thetrustee at the beginning of the year, anumber of simplifying changes areincluded in these final regulations. Forlifetime distributions, the marital status ofthe employee is determined on January 1each year. Divorce or death after that dateis disregarded until the next year. Further,a change in beneficiary due to thespouse’s death is not recognized until thefollowing year. Contributions and distri-butions made after December 31 of a cal-endar year are disregarded for purposes ofdetermining the minimum distribution forthe following year. An employee’saccount balance for the valuation calen-dar year that is also the employee’s firstdistribution calendar year is no longerreduced for a distribution on April 1 tosatisfy the minimum distribution require-ment for the first distribution calendaryear. Contributions made after the calen-dar year that are allocated as of a date inthe prior calendar year are no longerrequired to be added back. The onlyexceptions are rollover amounts, andrecharacterized conversion contributions,that are not in any account on December31 of a year. These changes are made tothe qualified plan rules as well as IRArules to maintain the parity between therules.

Other Rules for IRAs

These final regulations retain the gen-eral rule that the rules applying section401(a)(9) to qualified plans apply also toIRAs, unless otherwise provided. In addi-tion to retaining the special rules for IRAsprovided in the 2001 proposed regula-tions, these final regulations provide aspecial rule for trustee-to-trustee transfersbetween IRAs to coordinate with the rulethat allows aggregation of IRA distribu-tions. Although the IRA to IRA transfer isnot treated as a distribution for purposesof section 401(a)(9), in light of the factthat the required minimum distributionwith respect to the transferor IRA can betaken from any IRA, the transferor IRAwill be able to transfer the entire balanceand will not be required to retain theamount of the required minimum distri-bution for the year.

2002–19 I.R.B. 858 May 13, 2002

Section 403(b) Contracts

These regulations retain the basic rulein the 1987 and 2001 proposed regula-tions that a section 403(b) contract istreated as an individual retirement planfor purposes of satisfying the requiredminimum distribution rules. Conse-quently, the delegation of authority torequire reporting with respect to IRAsalso applies to section 403(b) contracts.However, the notice being issued in con-junction with these regulations providesthat no reporting is required at this timewith respect to required minimum distri-butions from section 403(b) contracts.

As requested in comments to the 1987and the 2001 proposed regulations, theseregulations provide that an annuity pro-vided with respect to a section 403(b)(9)retirement income account will not fail tosatisfy the requirements for annuity pay-ment under an annuity contract merelybecause the annuity is not provided undera contract purchased from an insurancecompany.

Section 1852(a) of TRA ’86 appliedsection 401(a)(9) to section 403(b) con-tracts effective for benefits accruing afterDecember 31, 1986. The final regulationsretain the rule in the proposed regulationsinterpreting the effective date of section1852(a) of TRA ’86 that does not applysection 401(a)(9) to the undistributed por-tion of the employee’s account balance ina section 403(b) contract as of December31, 1986 (the pre-’87 account balance).Further, the final regulations clarify that acontract will not lose the grandfather fora pre-’87 account balance merely becausethe account balance is transferred fromone section 403(b) contract to another,provided the issuer of the transferee con-tract satisfies the recordkeeping require-ments for the pre-’87 account balance.However, a distribution and rollover(including a direct rollover) of an amountfrom the pre-’87 account will cause thatamount to lose the grandfather treatment.

Amendment of Qualified Plans

The IRS intends to publish proceduresin the near future that will provide guid-ance on amending qualified plans toreflect these final regulations under sec-tion 401(a)(9).

Amendment of IRAs and Effective Date

Rev. Proc. 2002–10 (2002–4 I.R.B.401), provides guidance on when IRAdocuments must be updated for thesefinal regulations and for changes made byEGTRRA.

Effective Date

The regulations apply for determiningrequired minimum distributions for calen-dar years beginning on or after January 1,2003. For determining required minimumdistributions for calendar year 2002, tax-payers may rely on these final regula-tions, the 2001 proposed regulations, orthe 1987 proposed regulations.

Special Analyses

It has been determined that these regu-lations are not a significant regulatoryaction as defined in Executive Order12866. Therefore, a regulatory assess-ment is not required. It is hereby certifiedthat the collection of information in theseregulations does not have a significanteconomic impact on a substantial numberof small entities. This certification isbased on the following. The only provi-sions requiring collection of informationare in A–2 of § 1.401(a)(9)–1, A–4 of§ 1.401(a)(9)–3, A–5 and A–6 of§ 1.401(a)(9)–4, and A–2 of § 1.403(b)–3. The election described in A–4 of§ 1.401(a)(9)–3 is expected to be anunusual occurrence for small entitiesbecause few individuals with benefits inretirement plans maintained by smallentities are likely to make these elections.In the case of A–2 of § 1.401(a)(9)–1 andA–5 and A–6 of § 1.401(a)(9)–4, whendetermining required minimum distribu-tions in cases where a plan participantwishes to designate a trust as beneficiaryof the participant’s benefit, the reportingburden is primarily on the plan partici-pant, or trustee of the trust named as ben-eficiary, to supply information rather thanon the entity maintaining the retirementplan and the fact that the number of par-ticipants per plan to whom the burdenapplies is insignificant. In A–2 of§ 1.403(b)–3, the recordkeeping burdenwith respect to section 403(b) contractsunder which the pre-1987 account bal-ance must be maintained only applies toissuers and custodians of those contracts,

which generally are not small entities.Therefore, a Regulatory FlexibilityAnalysis (5 U.S.C. chapter 6) is notrequired for this regulation. Pursuant tosection 7805(f) of the Internal RevenueCode, the notices of proposed rulemakingpreceding the final rule were submitted tothe Chief Counsel for Advocacy of theSmall Business Administration for com-ment on their impact on small businessand temporary § 1.401(a)(9)–6T will besubmitted to the Chief Counsel for suchcomments.

Drafting Information

The principal authors of these regula-tions are Marjorie Hoffman and Cathy A.Vohs of the Office of the DivisionCounsel/Associate Chief Counsel (TaxExempt and Government Entities). How-ever, other personnel from the IRS andTreasury participated in their develop-ment.

* * * * *

Adoption of Amendments to theRegulations

Accordingly, 26 CFR part 1 isamended as follows:

PART 1 — INCOME TAXES

Paragraph 1. The authority citation forpart 1 is amended by adding entries innumerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *§ 1.401(a)(9)–1 is also issued under 26

U.S.C. 401(a)(9).§ 1.401(a)(9)–2 is also issued under 26

U.S.C. 401(a)(9).§ 1.401(a)(9)–3 is also issued under 26

U.S.C. 401(a)(9).§ 1.401(a)(9)–4 is also issued under 26

U.S.C. 401(a)(9).§ 1.401(a)(9)–5 is also issued under 26

U.S.C. 401(a)(9).§ 1.401(a)(9)–6T is also issued under

26 U.S.C. 401(a)(9).§ 1.401(a)(9)–7 is also issued under 26

U.S.C. 401(a)(9).§ 1.401(a)(9)–8 is also issued under 26

U.S.C. 401(a)(9).§ 1.401(a)(9)–9 is also issued under 26

U.S.C. 401(a)(9). * * *§ 1.403(b)–3 is also issued under 26

U.S.C. 403(b)(10). * * *§ 1.408–8 is also issued under 26

U.S.C. 408(a)(6) and (b)(3). * * *

May 13, 2002 859 2002–19 I.R.B.

Par. 2. Sections 1.401(a)(9)–0 through1.401(a)(9)–9 are added to read as fol-lows:

§ 1.401(a)(9)–0 Required minimum distri-butions; table of contents.

This table of contents lists the regula-tions relating to required minimum distri-butions under section 401(a)(9) of theInternal Revenue Code as follows:

§ 1.401(a)(9)–0 Required minimumdistributions; table of contents.

§ 1.401(a)(9)–1 Minimum distributionrequirement in general.

§ 1.401(a)(9)–2 Distributions com-mencing during an employee’s lifetime.

§ 1.401(a)(9)–3 Death before requiredbeginning date.

§ 1.401(a)(9)–4 Determination of thedesignated beneficiary.

§ 1.401(a)(9)–5 Required minimumdistributions from defined contributionplans.

§ 1.401(a)(9)–6T Required minimumdistributions for defined benefit plans andannuity contracts (temporary).

§ 1.401(a)(9)–7 Rollovers and trans-fers.

§ 1.401(a)(9)–8 Special rules.§ 1.401(a)(9)–9 Life expectancy and

distribution period tables.

§ 1.401(a)(9)–1 Minimum distributionrequirement in general.

Q–1. What plans are subject to theminimum distribution requirement undersection 401(a)(9), this section, and§§ 1.401(a)(9)–2 through 1.401(a)(9)–9?

A–1. Under section 401(a)(9), all stockbonus, pension, and profit-sharing plansqualified under section 401(a) and annu-ity contracts described in section 403(a)are subject to required minimum distribu-t ion rules. See this section and§§ 1.401(a)(9)–2 through 1.401(a)(9)–9for the distribution rules applicable tothese plans. Under section 403(b)(10),annuity contracts or custodial accountsdescribed in section 403(b) are subject torequired minimum distribution rules. See§ 1.403(b)–3 for the distribution rulesapplicable to these annuity contracts orcustodial accounts. Under sections408(a)(6) and 408(b)(3), individual retire-ment plans (including, for some purposes,Roth IRAs under section 408A) are sub-ject to required minimum distributionrules. See § 1.408–8 for the distribution

rules applicable to individual retirementplans and see § 1.408A–6 for the distri-bution rules applicable to Roth IRAsunder section 408A. Under section457(d)(2), certain deferred compensationplans for employees of tax exempt orga-nizations or state and local governmentemployees are subject to required mini-mum distribution rules.

Q–2. Which employee account bal-ances and benefits held under qualifiedtrusts and plans are subject to the distri-bution rules of section 401(a)(9), this sec-tion, and §§ 1.401(a)(9)–2 through1.401(a)(9)–9?

A–2. (a) In general. The distributionrules of section 401(a)(9) apply to allaccount balances and benefits in exist-ence on or after January 1, 1985. Thissection and §§ 1.401(a)(9)–2 through1.401(a)(9)–9 apply for purposes of deter-mining required minimum distributionsfor calendar years beginning on or afterJanuary 1, 2003.

(b) Beneficiaries. (1) The distributionrules of this section and §§ 1.401(a)(9)–2through 1.401(a)(9)–9 apply to accountbalances and benefits held for the benefitof a beneficiary for calendar years begin-ning on or after January 1, 2003, even ifthe employee died prior to January 1,2003. Thus, in the case of an employeewho died prior to January 1, 2003, thedesignated beneficiary must be redeter-mined in accordance with the provisionsof § 1.401(a)(9)–4 and the applicable dis-tribution period (determined under§ 1.401(a)(9)–5 or 1.401(a)(9)–6T,whichever is applicable) must be recon-structed for purposes of determining theamount required to be distributed for cal-endar years beginning on or after January1, 2003.

(2) A designated beneficiary that isreceiving payments under the 5-year ruleof section 401(a)(9)(B)(ii), either by affir-mative election or default provisions,may, if the plan so provides, switch tousing the life expectancy rule of section401(a)(9)(B)(iii) provided any amountsthat would have been required to be dis-tributed under the life expectancy rule ofsection 401(a)(9)(B)(iii) for all distribu-tion calendar years before 2004 are dis-tributed by the earlier of December 31,2003, or the end of the 5-year perioddetermined under A–2 of § 1.401(a)(9)–3.

(c) Trust documentation. If a trust failsto meet the rule of A–5 of§ 1.401(a)(9)–4 (permitting the benefi-ciaries of the trust, and not the trust itself,to be treated as the employee’s designatedbeneficiaries) solely because the trustdocumentation was not provided to theplan administrator by October 31 of thecalendar year following the calendar yearin which the employee died, and suchdocumentation is provided to the planadministrator by October 31, 2003, thebeneficiaries of the trust will be treated asdesignated beneficiaries of the employeeunder the plan for purposes of determin-ing the distribution period under section401(a)(9).

Q–3. What specific provisions must aplan contain in order to satisfy section401(a)(9)?

A–3. (a) Required provisions. In orderto satisfy section 401(a)(9), the plan mustinclude the provisions described in thisparagraph reflecting section 401(a)(9).First, the plan must generally set forth thestatutory rules of section 401(a)(9),including the incidental death benefitrequirement in section 401(a)(9)(G). Sec-ond, the plan must provide that distribu-tions will be made in accordance with thissection and §§ 1.401(a)(9)–2 through1.401(a)(9)–9. The plan document mustalso provide that the provisions reflectingsection 401(a)(9) override any distribu-tion options in the plan inconsistent withsection 401(a)(9). The plan also mustinclude any other provisions reflectingsection 401(a)(9) that are prescribed bythe Commissioner in revenue rulings,notices, and other guidance published inthe Internal Revenue Bulletin. See§ 601.601(d)(2)(ii)(b) of this chapter.

(b) Optional provisions. The plan mayalso include written provisions regardingany optional provisions governing plandistributions that do not conflict with sec-tion 401(a)(9) and the regulations there-under.

(c) Absence of optional provisions.Plan distributions commencing after anemployee’s death will be required to bemade under the default provision set forthin § 1.401(a)(9)–3 for distributionsunless the plan document containsoptional provisions that override suchdefault provisions. Thus, if distributionshave not commenced to the employee at

2002–19 I.R.B. 860 May 13, 2002

the time of the employee’s death, distri-butions after the death of an employee areto be made automatically in accordancewith the default provisions in A–4(a) of§ 1.401(a)(9)–3 unless the plan eitherspecifies in accordance with A–4(b) of§ 1.401(a)(9)–3 the method under whichdistributions will be made or provides forelections by the employee (or benefi-ciary) in accordance with A–4(c) of§ 1.401(a)(9)–3 and such elections aremade by the employee or beneficiary.

§ 1.401(a)(9)–2 Distributions commenc-ing during an employee’s lifetime.

Q–1. In the case of distributions com-mencing during an employee’s lifetime,how must the employee’s entire interestbe distributed in order to satisfy section401(a)(9)(A)?

A–1. (a) In order to satisfy section401(a)(9)(A), the entire interest of eachemployee must be distributed to suchemployee not later than the requiredbeginning date, or must be distributed,beginning not later than the requiredbeginning date, over the life of theemployee or joint lives of the employeeand a designated beneficiary or over aperiod not extending beyond the lifeexpectancy of the employee or the jointlife and last survivor expectancy of theemployee and the designated beneficiary.

(b) Section 401(a)(9)(G) provides thatlifetime distributions must satisfy theincidental death benefit requirements.

(c) The amount required to be distrib-uted for each calendar year in order tosatisfy section 401(a)(9)(A) and (G) gen-erally depends on whether a distributionis in the form of distributions under adefined contribution plan or annuity pay-ments under a defined benefit plan orunder an annuity contract. For the methodof determining the required minimum dis-tribution in accordance with section401(a)(9)(A) and (G) from an individualaccount under a defined contributionplan, see § 1.401(a)(9)–5. For the methodof determining the required minimum dis-tribution in accordance with section401(a)(9)(A) and (G) in the case of annu-ity payments from a defined benefit planor an annuity contract, see § 1.401(a)(9)–6T.

Q–2. For purposes of section401(a)(9)(C), what does the term requiredbeginning date mean?

A–2. (a) Except as provided in para-graph (b) of this A–2 with respect to a5-percent owner, as defined in paragraph(c) of this A-2, the term required begin-ning date means April 1 of the calendaryear following the later of the calendaryear in which the employee attains age70½ or the calendar year in which theemployee retires from employment withthe employer maintaining the plan.

(b) In the case of an employee who isa 5-percent owner, the term requiredbeginning date means April 1 of the cal-endar year following the calendar year inwhich the employee attains age 70½.

(c) For purposes of section 401(a)(9), a5-percent owner is an employee who is a5-percent owner (as defined in section416) with respect to the plan year endingin the calendar year in which theemployee attains age 70½.

(d) Paragraph (b) of this A–2 does notapply in the case of a governmental plan(within the meaning of section 414(d)) ora church plan. For purposes of this para-graph, the term church plan means a planmaintained by a church for churchemployees, and the term church meansany church (as defined in section3121(w)(3)(A)) or qualified church-controlled organization (as defined in sec-tion 3121(w)(3)(B)).

(e) A plan is permitted to provide thatthe required beginning date for purposesof section 401(a)(9) for all employees isApril 1 of the calendar year following thecalendar year in which an employeeattains age 70½ regardless of whether theemployee is a 5-percent owner.

Q–3. When does an employee attainage 70½?

A–3. An employee attains age 70½ asof the date six calendar months after the70th anniversary of the employee’s birth.For example, if an employee’s date ofbirth was June 30, 1933, the 70th anniver-sary of such employee’s birth is June 30,2003. Such employee attains age 70½ onDecember 30, 2003. Consequently, if theemployee is a 5-percent owner or retired,such employee’s required beginning dateis April 1, 2004. However, if the employ-ee’s date of birth was July 1, 1933, the70th anniversary of such employee’s birthwould be July 1, 2003. Such employeewould then attain age 70½ on January 1,2004, and such employee’s requiredbeginning date would be April 1, 2005.

Q–4. Must distributions made beforethe employee’s required beginning datesatisfy section 401(a)(9)?

A–4. Lifetime distributions madebefore the employee’s required beginningdate for calendar years before theemployee’s first distribution calendaryear, as defined in A–1(b) of§ 1.401(a)(9)–5, need not be made inaccordance with section 401(a)(9). How-ever, if distributions commence before theemployee’s required beginning date undera particular distribution option, such as inthe form of an annuity, the distributionoption fails to satisfy section 401(a)(9) atthe time distributions commence if, underterms of the particular distribution option,distributions to be made for the employ-ee’s first distribution calendar year or anysubsequent distribution calendar year willfail to satisfy section 401(a)(9).

Q–5. If distributions have begun to anemployee during the employee’s lifetime(in accordance with section 401(a)(9)(A)(ii)), how must distributions bemade after an employee’s death?

A–5. Section 401(a)(9)(B)(i) providesthat if the distribution of the employee’sinterest has begun in accordance with sec-tion 401(a)(9)(A)(ii) and the employeedies before his entire interest has beendistributed to him, the remaining portionof such interest must be distributed atleast as rapidly as under the distributionmethod being used under section401(a)(9)(A)(ii) as of the date of hisdeath. The amount required to be distrib-uted for each distribution calendar yearfollowing the calendar year of death gen-erally depends on whether a distributionis in the form of distributions from anindividual account under a defined contri-bution plan or annuity payments under adefined benefit plan. For the method ofdetermining the required minimum distri-bution in accordance with section401(a)(9)(B)(i) from an individualaccount, see § 1.401(a)(9)–5. In the caseof annuity payments from a defined ben-efit plan or an annuity contract, see§ 1.401(a)(9)–6T.

Q–6. For purposes of section401(a)(9)(B), when are distributions con-sidered to have begun to the employee inaccordance with section 401(a)(9)(A)(ii)?

A–6. (a) General rule. Except as oth-erwise provided in A–10 of § 1.401(a)(9)–6T, distributions are not treated as

May 13, 2002 861 2002–19 I.R.B.

having begun to the employee in accor-dance with section 401(a)(9)(A)(ii) untilthe employee’s required beginning date,without regard to whether payments havebeen made before that date. Thus, section401(a)(9)(B)(i) only applies if anemployee dies on or after the employee’srequired beginning date. For example, ifemployee A retires in 2003, the calendaryear A attains age 65½, and beginsreceiving installment distributions from aprofit-sharing plan over a period notexceeding the joint life and last survivorexpectancy of A and A’s spouse, benefitsare not treated as having begun in accor-dance with section 401(a)(9)(A)(ii) untilApril 1, 2009 (the April 1 following thecalendar year in which A attains age70½). Consequently, if A dies beforeApril 1, 2009 (A’s required beginningdate), distributions after A’s death mustbe made in accordance with section401(a)(9)(B)(ii) or (iii) and (iv) and§ 1.401(a)(9)–3, and not sect ion401(a)(9)(B)(i). This is the case withoutregard to whether the plan has distributedthe minimum distribution for the first dis-tribution calendar year (as defined inA–1(b) of § 1.401(a)(9)–5) before A’sdeath.

(b) If a plan provides, in accordancewith A–2(e) of this section, that therequired beginning date for purposes ofsection 401(a)(9) for all employees isApril 1 of the calendar year following thecalendar year in which an employeeattains age 70½, an employee who dieson or after the required beginning datedetermined under the plan terms is treatedas dying after the employee’s distribu-tions have begun for purposes of this A–6even though the employee dies before theApril 1 following the calendar year inwhich the employee retires.

§ 1.401(a)(9)–3 Death before requiredbeginning date.

Q–1. If an employee dies before theemployee’s required beginning date, howmust the employee’s entire interest bedistributed in order to satisfy section401(a)(9)?

A–1. (a) Except as otherwise providedin A–10 of § 1.401(a)(9)–6T, if anemployee dies before the employee’srequired beginning date (and, thus, beforedistributions are treated as having begunin accordance with section 401(a)(9)

(A)(ii)), distribution of the employee’sentire interest must be made in accor-dance with one of the methods describedin section 401(a)(9)(B)(ii) or (iii) and(iv). One method (the 5-year rule in sec-tion 401(a)(9)(B)(ii)) requires that theentire interest of the employee be distrib-uted within 5 years of the employee’sdeath regardless of who or what entityreceives the distribution. Another method(the life expectancy rule in section401(a)(9)(B)(iii) and (iv)) requires thatany portion of an employee’s interestpayable to (or for the benefit of) a desig-nated beneficiary be distributed, com-mencing within one year of the employ-ee’s death, over the life of suchbeneficiary (or over a period not extend-ing beyond the life expectancy of suchbeneficiary). Section 401(a)(9)(B)(iv)provides special rules where the desig-nated beneficiary is the surviving spouseof the employee, including a special com-mencement date for distributions undersection 401(a)(9)(B)(iii) to the survivingspouse.

(b) See A–4 of this section for therules for determining which of the meth-ods described in paragraph (a) of this A–1applies. See A–3 of this section to deter-mine when distributions under the excep-tion to the 5-year rule in section401(a)(9)(B)(iii) and (iv) must com-mence. See A–2 of this section to deter-mine when the 5-year period in section401(a)(9)(B)(ii) ends. For distributionsusing the life expectancy rule in section401(a)(9)(B)(iii) and (iv), see § 1.401(a)(9)–4 in order to determine the designatedbeneficiary under section 401(a)(9)(B)(iii) and (iv), see § 1.401(a)(9)–5 forthe rules for determining the requiredminimum distribution under a definedcontribution plan, and see § 1.401(a)(9)–6T for required minimum distribu-tions under defined benefit plans.

Q–2. By when must the employee’sentire interest be distributed in order tosatisfy the 5-year rule in section401(a)(9)(B)(ii)?

A–2. In order to satisfy the 5-year rulein section 401(a)(9)(B)(ii), the employ-ee’s entire interest must be distributed bythe end of the calendar year which con-tains the fifth anniversary of the date ofthe employee’s death. For example, if anemployee dies on January 1, 2003, theentire interest must be distributed by the

end of 2008, in order to satisfy the 5-yearrule in section 401(a)(9)(B)(ii).

Q–3. When are distributions requiredto commence in order to satisfy the lifeexpectancy rule in section 401(a)(9)(B)(iii) and (iv)?

A–3. (a) Nonspouse beneficiary. Inorder to satisfy the life expectancy rule insection 401(a)(9)(B)(iii), if the designatedbeneficiary is not the employee’s surviv-ing spouse, distributions must commenceon or before the end of the calendar yearimmediately following the calendar yearin which the employee died. This rulealso applies to the distribution of theentire remaining benefit if another indi-vidual is a designated beneficiary in addi-tion to the employee’s surviving spouse.See A–2 and A–3 of § 1.401(a)(9)–8,however, if the employee’s benefit isdivided into separate accounts.

(b) Spousal beneficiary. In order tosatisfy the rule in section 401(a)(9)(B)(iii)and (iv), if the sole designated beneficiaryis the employee’s surviving spouse, distri-butions must commence on or before thelater of—

(1) The end of the calendar year imme-diately following the calendar year inwhich the employee died; and

(2) The end of the calendar year inwhich the employee would have attainedage 70½.

Q–4. How is it determined whether the5–year rule in section 401(a)(9)(B)(ii) orthe life expectancy rule in section401(a)(9)(B)(iii) and (iv) applies to a dis-tribution?

A–4. (a) No plan provision. If a plandoes not adopt an optional provisiondescribed in paragraph (b) or (c) of thisA–4 specifying the method of distributionafter the death of an employee, distribu-tion must be made as follows:

(1) If the employee has a designatedbeneficiary, as determined under § 1.401(a)(9)–4, distributions are to be made inaccordance with the life expectancy rulein section 401(a)(9)(B)(iii) and (iv).

(2) If the employee has no designatedbeneficiary, distributions are to be madein accordance with the 5-year rule in sec-tion 401(a)(9)(B)(ii).

(b) Optional plan provisions. A planmay adopt a provision specifying eitherthat the 5-year rule in section401(a)(9)(B)(ii) will apply to certain dis-tributions after the death of an employee

2002–19 I.R.B. 862 May 13, 2002

even if the employee has a designatedbeneficiary or that distribution in everycase will be made in accordance with the5-year rule in section 401(a)(9)(B)(ii).Further, a plan need not have the samemethod of distribution for the benefits ofall employees in order to satisfy section401(a)(9).

(c) Elections. A plan may adopt a pro-vision that permits employees (or benefi-ciaries) to elect on an individual basiswhether the 5–year rule in section 401(a)(9)(B)(ii) or the life expectancy rule insection 401(a)(9)(B)(iii) and (iv) appliesto distributions after the death of anemployee who has a designated benefi-ciary. Such an election must be made nolater than the earlier of the end of the cal-endar year in which distribution would berequired to commence in order to satisfythe requirements for the life expectancyrule in section 401(a)(9)(B)(iii) and (iv)(see A–3 of this section for the determina-tion of such calendar year) or the end ofthe calendar year which contains the fifthanniversary of the date of death of theemployee. As of the last date the electionmay be made, the election must be irrevo-cable with respect to the beneficiary (andall subsequent beneficiaries) and mustapply to all subsequent calendar years. Ifa plan provides for the election, the planmay also specify the method of distribu-tion that applies if neither the employeenor the beneficiary makes the election. Ifneither the employee nor the beneficiaryelects a method and the plan does notspecify which method applies, distribu-tion must be made in accordance withparagraph (a) of this A–4.

Q–5. If the employee’s survivingspouse is the employee’s sole designatedbeneficiary and such spouse dies after theemployee, but before distributions havebegun to the surviving spouse under sec-tion 401(a)(9)(B)(iii) and (iv), how is theemployee’s interest to be distributed?

A–5. Pursuant to sect ion401(a)(9)(B)(iv)(II), if the survivingspouse is the employee’s sole designatedbeneficiary and dies after the employee,but before distributions to such spousehave begun under section 401(a)(9)(B)(iii) and (iv), the 5–year rule in sec-tion 401(a)(9)(B)(ii) and the life expect-ancy rule in section 401(a)(9)(B)(iii) are to be applied as if the survivingspouse were the employee. In applying

this rule, the date of death of the surviv-ing spouse shall be substituted for thedate of death of the employee. However,in such case, the rules in section401(a)(9)(B)(iv) are not available to thesurviving spouse of the deceased employ-ee’s surviving spouse.

Q–6. For purposes of section401(a)(9)(B)(iv)(II), when are distribu-tions considered to have begun to the sur-viving spouse?

A–6. Distributions are considered tohave begun to the surviving spouse of anemployee, for purposes of section401(a)(9)(B)(iv)(II), on the date, deter-mined in accordance with A–3 of this sec-tion, on which distributions are requiredto commence to the surviving spouse,even though payments have actually beenmade before that date. See A–11 of§ 1.401(a)(9)–6T for a special rule forannuities.

§ 1.401(a)(9)–4 Determination of the des-ignated beneficiary.

Q–1. Who is a designated beneficiaryunder section 401(a)(9)(E)?

A–1. A designated beneficiary is anindividual who is designated as a benefi-ciary under the plan. An individual maybe designated as a beneficiary under theplan either by the terms of the plan or, ifthe plan so provides, by an affirmativeelection by the employee (or the employ-ee’s surviving spouse) specifying the ben-eficiary. A beneficiary designated as suchunder the plan is an individual who isentitled to a portion of an employee’sbenefit, contingent on the employee’sdeath or another specified event. Forexample, if a distribution is in the form ofa joint and survivor annuity over the lifeof the employee and another individual,the plan does not satisfy section 401(a)(9)unless such other individual is a desig-nated beneficiary under the plan. A desig-nated beneficiary need not be specified byname in the plan or by the employee tothe plan in order to be a designated ben-eficiary so long as the individual who isto be the beneficiary is identifiable underthe plan. The members of a class of ben-eficiaries capable of expansion or con-traction will be treated as being identifi-able if it is possible, to identify the classmember with the shortest life expectancy.The fact that an employee’s interest underthe plan passes to a certain individual

under a will or otherwise under applicablestate law does not make that individual adesignated beneficiary unless the indi-vidual is designated as a beneficiaryunder the plan. See A–6 of § 1.401(a)(9)–8 for rules which apply to qualifieddomestic relation orders.

Q–2. Must an employee (or theemployee’s spouse) make an affirmativeelection specifying a beneficiary for aperson to be a designated beneficiaryunder section 40l(a)(9)(E)?

A–2. No, a designated beneficiary isan individual who is designated as a ben-eficiary under the plan whether or not thedesignation under the plan was made bythe employee. The choice of beneficiaryis subject to the requirements of sections401(a)(11), 414(p), and 417.

Q–3. May a person other than an indi-vidual be considered to be a designatedbeneficiary for purposes of section401(a)(9)?

A–3. No, only individuals may be des-ignated beneficiaries for purposes of sec-tion 401(a)(9). A person that is not anindividual, such as the employee’s estate,may not be a designated beneficiary. If aperson other than an individual is desig-nated as a beneficiary of an employee’sbenefit, the employee will be treated ashaving no designated beneficiary for pur-poses of section 401(a)(9), even if thereare also individuals designated as benefi-ciaries. However, see A–5 of this sectionfor special rules that apply to trusts andA–2 and A–3 of § 1.401(a)(9)–8 for rulesthat apply to separate accounts.

Q–4. When is the designated benefi-ciary determined?

A–4. (a) General rule. In order to be adesignated beneficiary, an individual mustbe a beneficiary as of the date of death.Except as provided in paragraph (b) and§ 1.401(a)(9)–6T, the employee’s desig-nated beneficiary will be determinedbased on the beneficiaries designated asof the date of death who remain benefi-ciaries as of September 30 of the calendaryear following the calendar year of theemployee’s death. Consequently, exceptas provided in § 1.401(a)(9)–6T, any per-son who was a beneficiary as of the dateof the employee’s death, but is not a ben-eficiary as of that September 30 (e.g.,because the person receives the entirebenefit to which the person is entitledbefore that September 30), is not taken

May 13, 2002 863 2002–19 I.R.B.

into account in determining the employ-ee’s designated beneficiary for purposesof determining the distribution period forrequired minimum distributions after theemployee’s death. Accordingly, if a per-son disclaims entitlement to the employ-ee’s benefit, pursuant to a disclaimer thatsatisfies section 2518 by that September30 thereby allowing other beneficiaries toreceive the benefit in lieu of that person,the disclaiming person is not taken intoaccount in determining the employee’sdesignated beneficiary.

(b) Surviving spouse. As provided inA–5 of § 1.401(a)(9)–3, if the employee’sspouse is the sole designated beneficiaryas of September 30 of the calendar yearfollowing the calendar year of theemployee’s death, and the survivingspouse dies after the employee and beforethe date on which distributions havebegun to the surviving spouse under sec-tion 401(a)(9)(B)(iii) and (iv), the rule insection 40l(a)(9)(B)(iv)(II) will apply.Thus, for example, the relevant desig-nated beneficiary for determining the dis-tribution period after the death of the sur-viving spouse is the designatedbeneficiary of the surviving spouse. Simi-larly, such designated beneficiary will bedetermined based on the beneficiariesdesignated as of the date of the survivingspouse’s death and who remain beneficia-ries as of September 30 of the calendaryear following the calendar year of thesurviving spouse’s death. Further, if, as ofthat September 30, there is no designatedbeneficiary under the plan with respect tothat surviving spouse, distribution mustbe made in accordance with the 5-yearrule in section 401(a)(9)(B)(ii) and A–2of § 1.401(a)(9)–3.

(c) Deceased beneficiary. For purposesof this A–4, an individual who is a ben-eficiary as of the date of the employee’sdeath and dies prior to September 30 ofthe calendar year following the calendaryear of the employee’s death without dis-claiming continues to be treated as a ben-eficiary as of the September 30 of the cal-endar year following the calendar year ofthe employee’s death in determining theemployee’s designated beneficiary forpurposes of determining the distributionperiod for required minimum distribu-tions after the employee’s death, withoutregard to the identity of the successorbeneficiary who is entitled to distribu-

tions as the beneficiary of the deceasedbeneficiary. The same rule applies in thecase of distributions to which A–5 of§ 1.401(a)(9)–3 applies so that, if an indi-vidual is designated as a beneficiary of anemployee’s surviving spouse as of thespouse’s date of death and dies prior toSeptember 30 of the year following theyear of the surviving spouse’s death, thatindividual will continue to be treated as adesignated beneficiary.

Q–5. If a trust is named as a benefi-ciary of an employee, will the beneficia-ries of the trust with respect to the trust’sinterest in the employee’s benefit betreated as having been designated as ben-eficiaries of the employee under the planfor purposes of determining the distribu-tion period under section 401(a)(9)?

A–5. (a) If the requirements of para-graph (b) of this A–5 are met with respectto a trust that is named as the beneficiaryof an employee under the plan, the ben-eficiaries of the trust (and not the trustitself) will be treated as having been des-ignated as beneficiaries of the employeeunder the plan for purposes of determin-ing the distribution period under section401(a)(9).

(b) The requirements of this paragraph(b) are met if, during any period duringwhich required minimum distributions arebeing determined by treating the benefi-ciaries of the trust as designated benefi-ciaries of the employee, the followingrequirements are met —

(1) The trust is a valid trust under statelaw, or would be but for the fact that thereis no corpus.

(2) The trust is irrevocable or will, byits terms, become irrevocable upon thedeath of the employee.

(3) The beneficiaries of the trust whoare beneficiaries with respect to thetrust’s interest in the employee’s benefitare identifiable within the meaning ofA–1 of this section from the trust instru-ment.

(4) The documentation described inA–6 of this section has been provided tothe plan administrator.

(c) In the case of payments to a trusthaving more than one beneficiary, seeA–7 of § 1.401(a)(9)–5 for the rules fordetermining the designated beneficiarywhose life expectancy will be used todetermine the distribution period and A–3of this section for the rules that apply if a

person other than an individual is desig-nated as a beneficiary of an employee’sbenefit. However, the separate accountrules under A–2 of § 1.401(a)(9)–8 arenot available to beneficiaries of a trustwith respect to the trust’s interest in theemployee’s benefit.

(d) If the beneficiary of the trustnamed as beneficiary of the employee’sinterest is another trust, the beneficiariesof the other trust will be treated as beingdesignated as beneficiaries of the firsttrust, and thus, having been designated bythe employee under the plan for purposesof determining the distribution periodunder section 401(a)(9)(A)(ii), providedthat the requirements of paragraph (b) ofthis A–5 are satisfied with respect to suchother trust in addition to the trust namedas beneficiary.

Q–6. If a trust is named as a benefi-ciary of an employee, what documenta-tion must be provided to the plan admin-istrator?

A–6. (a) Required minimum distribu-tions before death. If an employee desig-nates a trust as the beneficiary of his orher entire benefit and the employee’sspouse is the sole beneficiary of the trust,in order to satisfy the documentationrequirements of this A–6 so that thespouse can be treated as the sole desig-nated beneficiary of the employee’s ben-efits (if the other requirements of para-graph (b) of A–5 of this section aresatisfied), the employee must either —

(1) Provide to the plan administrator acopy of the trust instrument and agreethat if the trust instrument is amended atany time in the future, the employee will,within a reasonable time, provide to theplan administrator a copy of each suchamendment; or

(2) Provide to the plan administrator alist of all of the beneficiaries of the trust(including contingent and remaindermenbeneficiaries with a description of theconditions on their entitlement sufficientto establish that the spouse is the solebeneficiary) for purposes of section401(a)(9); certify that, to the best of theemployee’s knowledge, this list is correctand complete and that the requirements ofparagraph (b)(1), (2), and (3) of A–5 ofthis section are satisfied; agree that, if thetrust instrument is amended at any time inthe future, the employee will, within areasonable time, provide to the plan

2002–19 I.R.B. 864 May 13, 2002

administrator corrected certifications tothe extent that the amendment changesany information previously certified; andagree to provide a copy of the trust instru-ment to the plan administrator upondemand.

(b) Required minimum distributionsafter death. In order to satisfy the docu-mentation requirement of this A–6 forrequired minimum distributions after thedeath of the employee (or spouse in acase to which A–5 of § 1.401(a)(9)–3applies), by October 31 of the calendaryear immediately following the calendaryear in which the employee died, thetrustee of the trust must either —

(1) Provide the plan administrator witha final list of all beneficiaries of the trust(including contingent and remaindermenbeneficiaries with a description of theconditions on their entitlement) as of Sep-tember 30 of the calendar year followingthe calendar year of the employee’s death;certify that, to the best of the trustee’sknowledge, this list is correct and com-plete and that the requirements of para-graphs (b)(1), (2), and (3) of A–5 of thissection are satisfied; and agree to providea copy of the trust instrument to the planadministrator upon demand; or

(2) Provide the plan administrator witha copy of the actual trust document forthe trust that is named as a beneficiary ofthe employee under the plan as of theemployee’s date of death.

(c) Relief for discrepancy betweentrust instrument and employee certifica-tions or earlier trust instruments. (1) Ifrequired minimum distributions are deter-mined based on the information providedto the plan administrator in certificationsor trust instruments described in para-graph (a) or (b) of this A–6, a plan willnot fail to satisfy section 401(a)(9) merelybecause the actual terms of the trustinstrument are inconsistent with the infor-mation in those certifications or trustinstruments previously provided to theplan administrator, but only if the planadministrator reasonably relied on theinformation provided and the requiredminimum distributions for calendar yearsafter the calendar year in which the dis-crepancy is discovered are determinedbased on the actual terms of the trustinstrument.

(2) For purposes of determining theamount of the excise tax under section

4974, the required minimum distributionis determined for any year based on theactual terms of the trust in effect duringthe year.

§ 1.401(a)(9)–5 Required minimum distri-butions from defined contribution plans.

Q–1. If an employee’s benefit is in theform of an individual account under adefined contribution plan, what is theamount required to be distributed for eachcalendar year?

A–1. (a) General rule. If an employ-ee’s accrued benefit is in the form of anindividual account under a defined contri-bution plan, the minimum amountrequired to be distributed for each distri-bution calendar year, as defined in para-graph (b) of this A–1, is equal to the quo-tient obtained by dividing the account(determined under A–3 of this section) bythe applicable distribution period (deter-mined under A–4 or A–5 of this section,whichever is applicable). However, therequired minimum distribution amountwill never exceed the entire account bal-ance on the date of the distribution. SeeA–8 of this section for rules that apply ifa portion of the employee’s account is notvested. Further, the minimum distributionrequired to be distributed on or before anemployee’s required beginning date isalways determined under sect ion401(a)(9)(A)(ii) and this A–1 and not sec-tion 401(a)(9)(A)(i).

(b) Distribution calendar year. A cal-endar year for which a minimum distribu-tion is required is a distribution calendaryear. If an employee’s required beginningdate is April 1 of the calendar year fol-lowing the calendar year in which theemployee attains age 70½, the employ-ee’s first distribution calendar year is theyear the employee attains age 70½. If anemployee’s required beginning date isApril 1 of the calendar year following thecalendar year in which the employeeretires, the employee’s first distributioncalendar year is the calendar year inwhich the employee retires. In the case ofdistributions to be made in accordancewith the life expectancy rule in § 1.401(a)(9)–3 and in section 401(a)(9)(B)(iii)and (iv), the first distribution calendaryear is the calendar year containing thedate described in A–3(a) or A–3(b) of§ 1.401(a)(9)–3, whichever is applicable.

(c) Time for distributions. The distribu-tion required to be made on or before theemployee’s required beginning date shallbe treated as the distribution required forthe employee’s first distribution calendaryear (as defined in paragraph (b) of thisA–1). The required minimum distributionfor other distribution calendar years,including the required minimum distribu-tion for the distribution calendar year inwhich the employee’s required beginningdate occurs, must be made on or beforethe end of that distribution calendar year.

(d) Minimum distribution incidentalbenefit requirement. If distributions of anemployee’s account balance under adefined contribution plan are made inaccordance with this section, the mini-mum distribution incidental benefitrequirement of section 401(a)(9)(G) issatisfied. Further, with respect to theretirement benefits provided by thataccount balance, to the extent the inciden-tal benefit requirement of § 1.401–1(b)(1)(i) requires a distribution, thatrequirement is deemed to be satisfied ifdistributions satisfy the minimum distri-bution incidental benefit requirement ofsection 401(a)(9)(G) and this section.

(e) Annuity contracts. Instead of satis-fying this A–1, the minimum distributionrequirement may be satisfied by the pur-chase of an annuity contract from aninsurance company in accordance withA–4 of § 1.401(a)(9)–6T with theemployee’s entire individual account. Ifsuch an annuity is purchased after distri-butions are required to commence (therequired beginning date, in the case ofdistributions commencing before death,or the date determined under A–3 of§ 1.401(a)(9)–3, in the case of distribu-tions commencing after death), paymentsunder the annuity contract purchased willsatisfy section 401(a)(9) for distributioncalendar years after the calendar year ofthe purchase if payments under the annu-ity contract are made in accordance with§ 1.401(a)(9)–6T. In such a case, pay-ments under the annuity contract will betreated as distributions from the indi-vidual account for purposes of determin-ing if the individual account satisfies sec-tion 401(a)(9) for the calendar year of thepurchase. An employee may also pur-chase an annuity contract with a portionof the employee’s account under the rulesof A–2(a)(3) of § 1.401(a)(9)–8.

May 13, 2002 865 2002–19 I.R.B.

Q–2. If an employee’s benefit is in theform of an individual account and, in anycalendar year, the amount distributedexceeds the minimum required, willcredit be given in subsequent calendaryears for such excess distribution?

A–2. If, for any distribution calendaryear, the amount distributed exceeds theminimum required, no credit will begiven in subsequent calendar years forsuch excess distribution.

Q–3. What is the amount of theaccount of an employee used for deter-mining the employee’s required minimumdistribution in the case of an individualaccount?

A–3. (a) In the case of an individualaccount, the benefit used in determiningthe required minimum distribution for adistribution calendar year is the accountbalance as of the last valuation date in thecalendar year immediately preceding thatdistribution calendar year (valuation cal-endar year) adjusted in accordance withparagraphs (b) and (c) of this A–3.

(b) The account balance is increasedby the amount of any contributions or for-feitures allocated to the account balanceas of dates in the valuation calendar yearafter the valuation date. For this purpose,contributions that are allocated to theaccount balance as of dates in the valua-tion calendar year after the valuation date,but that are not actually made during thevaluation calendar year, are permitted tobe excluded.

(c) The account balance is decreasedby distributions made in the valuation cal-endar year after the valuation date.

(d) If an amount is distributed by oneplan and rolled over to another plan(receiving plan), A–2 of § 1.401(a)(9)–7provides additional rules for determiningthe benefit and required minimum distri-bution under the receiving plan. If anamount is transferred from one plan(transferor plan) to another plan (trans-feree plan), A–3 and A–4 of§ 1.401(a)(9)–7 provide additional rulesfor determining the amount of therequired minimum distribution and thebenefit under both the transferor andtransferee plans.

Q–4. For required minimum distribu-tions during an employee’s lifetime, whatis the applicable distribution period?

A–4. (a) General rule. Except as pro-vided in paragraph (b) of this A–4, the

applicable distribution period for requiredminimum distributions for distributioncalendar years up to and including thedistribution calendar year that includesthe employee’s date of death is deter-mined using the Uniform Lifetime Tablein A–2 of § 1.401(a)(9)–9 for the employ-ee’s age as of the employee’s birthday inthe relevant distribution calendar year. Ifan employee dies on or after the requiredbeginning date, the distribution periodapplicable for calculating the amount thatmust be distributed during the distributioncalendar year that includes the employ-ee’s death is determined as if theemployee had lived throughout that year.Thus, a minimum required distribution,determined as if the employee had livedthroughout that year, is required for theyear of the employee’s death and thatamount must be distributed to a benefi-ciary to the extent it has not already beendistributed to the employee.

(b) Spouse is sole beneficiary—(1)General rule. Except as otherwise pro-vided in paragraph (b)(2) of this A–4, ifthe sole designated beneficiary of anemployee is the employee’s survivingspouse, for required minimum distribu-tions during the employee’s lifetime, theapplicable distribution period is thelonger of the distribution period deter-mined in accordance with paragraph (a)of this A–4 or the joint life expectancy ofthe employee and spouse using theemployee’s and spouse’s attained ages asof the employee’s and the spouse’s birth-days in the distribution calendar year. Thespouse is sole designated beneficiary forpurposes of determining the applicabledistribution period for a distribution cal-endar year during the employee’s lifetimeonly if the spouse is the sole beneficiaryof the employee’s entire interest at alltimes during the distribution calendaryear.

(2) Change in marital status. If theemployee and the employee’s spouse aremarried on January 1 of a distribution cal-endar year, but do not remain marriedthroughout that year (i.e., the employee orthe employee’s spouse die or they becomedivorced during that year), the employeewill not fail to have a spouse as theemployee’s sole beneficiary for that yearmerely because they are not marriedthroughout that year. If an employee’sspouse predeceases the employee, the

spouse will not fail to be the employee’ssole beneficiary for the distribution calen-dar year that includes the date of thespouse’s death solely because, for theperiod remaining in that year after thespouse’s death, someone other than thespouse is named as beneficiary. However,the change in beneficiary due to the deathor divorce of the spouse will be effectivefor purposes of determining the appli-cable distribution period under section401(a)(9) in the distribution calendar yearfollowing the distribution calendar yearthat includes the date of the spouse’sdeath or divorce.

Q–5. For required minimum distribu-tions after an employee’s death, what isthe applicable distribution period?

A–5. (a) Death on or after the employ-ee’s required beginning date. If anemployee dies after distribution hasbegun as determined under A–6 of§ 1.401(a)(9)–2 (generally on or after theemployee’s required beginning date), inorder to satisfy section 401(a)(9)(B)(i),the applicable distribution period for dis-tribution calendar years after the distribu-tion calendar year containing the employ-ee’s date of death is either —

(1) If the employee has a designatedbeneficiary as of the date determinedunder A–4 of § 1.401(a)(9)–4, the longerof —

(i) The remaining life expectancy ofthe employee’s designated beneficiarydetermined in accordance with paragraph(c)(1) or (2) of this A–5; and

(ii) The remaining life expectancy ofthe employee determined in accordancewith paragraph (c)(3) of this A–5; or

(2) If the employee does not have adesignated beneficiary as of the datedetermined under A–4 of § 1.401(a)(9)–4,the remaining life expectancy of theemployee determined in accordance withparagraph (c)(3) of this A–5.

(b) Death before an employee’srequired beginning date. If an employeedies before distribution has begun, asdetermined under A–5 of § 1.401(a)(9)–2(generally before the employee’s requiredbeginning date), in order to satisfy section401(a)(9)(B)(iii) or (iv) and the lifeexpectancy rule described in A–1 of§ 1.401(a)(9)–3, the applicable distribu-tion period for distribution calendar yearsafter the distribution calendar year con-taining the employee’s date of death is

2002–19 I.R.B. 866 May 13, 2002

determined in accordance with paragraph(c) of this A–5. See A–4 of§ 1.401(a)(9)–3 to determine when the5-year rule of in section 401(a)(9)(B)(ii)applies (e.g., there is no designated ben-eficiary or the 5-year rule is elected orspecified by plan provision).

(c) Life expectancy—(1) Nonspousedesignated beneficiary. Except as other-wise provided in paragraph (c)(2), theapplicable distribution period measuredby the beneficiary’s remaining lifeexpectancy is determined using the ben-eficiary’s age as of the beneficiary’sbirthday in the calendar year immediatelyfollowing the calendar year of theemployee’s death. In subsequent calendaryears, the applicable distribution period isreduced by one for each calendar yearthat has elapsed after the calendar yearimmediately following the calendar yearof the employee’s death.

(2) Spouse designated beneficiary. Ifthe surviving spouse of the employee isthe employee’s sole beneficiary, theapplicable distribution period is measuredby the surviving spouse’s life expectancyusing the surviving spouse’s birthday foreach distribution calendar year after thecalendar year of the employee’s death upthrough the calendar year of the spouse’sdeath. For calendar years after the calen-dar year of the spouse’s death, the appli-cable distribution period is the lifeexpectancy of the spouse using the age ofthe spouse as of the spouse’s birthday inthe calendar year of the spouse’s death,reduced by one for each calendar yearthat has elapsed after the calendar year ofthe spouse’s death.

(3) No designated beneficiary. If theemployee does not have a designated ben-eficiary, the applicable distribution periodmeasured by the employee’s remaininglife expectancy is the life expectancy ofthe employee using the age of theemployee as of the employee’s birthdayin the calendar year of the employee’sdeath. In subsequent calendar years, theapplicable distribution period is reducedby one for each calendar year that haselapsed after the calendar year of theemployee’s death.

Q–6. What life expectancies must beused for purposes of determining requiredminimum distributions under section401(a)(9)?

A–6. Life expectancies for purposes ofdetermining required minimum distribu-tions under section 401(a)(9) must becomputed using the Single Life Table inA–1 of § 1.401(a)(9)–9 and the Joint andLast Survivor Table in A–3 of§ 1.401(a)(9)–9.

Q–7. If an employee has more thanone designated beneficiary, which desig-nated beneficiary’s life expectancy willbe used to determine the applicable distri-bution period?

A–7. (a) General rule—(1) Except asotherwise provided in paragraph (c) ofthis A–7, if more than one individual isdesignated as a beneficiary with respectto an employee as of the applicable datefor determining the designated benefi-ciary under A–4 of § 1.401(a)(9)–4, thedesignated beneficiary with the shortestlife expectancy will be the designatedbeneficiary for purposes of determiningthe applicable distribution period.

(2) See A–3 of § 1.401(a)(9)–4 forrules that apply if a person other than anindividual is designated as a beneficiaryand see A–2 and A–3 of §1.401(a)(9)–8for special rules that apply if an employ-ee’s benefit under a plan is divided intoseparate accounts and the beneficiarieswith respect to a separate account differfrom the beneficiaries of another separateaccount.

(b) Contingent beneficiary. Except asprovided in paragraph (c)(1) of this A–7,if a beneficiary’s entitlement to anemployee’s benefit after the employee’sdeath is a contingent right, such contin-gent beneficiary is nevertheless consid-ered to be a beneficiary for purposes ofdetermining whether a person other thanan individual is designated as a benefi-ciary (resulting in the employee beingtreated as having no designated benefi-ciary under the rules of A–3 of§ 1.401(a)(9)–4) and which designatedbeneficiary has the shortest life expect-ancy under paragraph (a) of this A–7.

(c) Successor beneficiary—(1) A per-son will not be considered a beneficiaryfor purposes of determining who is thebeneficiary with the shortest life expect-ancy under paragraph (a) of this A–7, orwhether a person who is not an individualis a beneficiary, merely because the per-son could become the successor to theinterest of one of the employee’s benefi-ciaries after that beneficiary’s death.

However, the preceding sentence does notapply to a person who has any right(including a contingent right) to anemployee’s benefit beyond being a merepotential successor to the interest of oneof the employee’s beneficiaries upon thatbeneficiary’s death. Thus, for example, ifthe first beneficiary has a right to allincome with respect to an employee’sindividual account during that beneficia-ry’s life and a second beneficiary has aright to the principal but only after thedeath of the first income beneficiary (anyportion of the principal distributed duringthe life of the first income beneficiary tobe held in trust until that first beneficia-ry’s death), both beneficiaries must betaken into account in determining thebeneficiary with the shortest life expect-ancy and whether only individuals arebeneficiaries.

(2) If the individual beneficiary whoselife expectancy is being used to calculatethe distribution period dies after Septem-ber 30 of the calendar year following thecalendar year of the employee’s death,such beneficiary’s remaining life expect-ancy will be used to determine the distri-bution period without regard to the lifeexpectancy of the subsequent beneficiary.

(3) This paragraph (c) is illustrated bythe following examples:

Example 1. (i) Employer M maintains a definedcontribution plan, Plan X. Employee A, anemployee of M, died in 2005 at the age of 55, sur-vived by spouse, B, who was 50 years old. Prior toA’s death, M had established an account balance forA in Plan X. A’s account balance is invested only inproductive assets. A named a testamentary trust(Trust P) established under A’s will as the benefi-ciary of all amounts payable from A’s account inPlan X after A’s death. A copy of the Trust P and alist of the trust beneficiaries were provided to theplan administrator of Plan X by October 31 of thecalendar year following the calendar year of A’sdeath. As of the date of A’s death, the Trust P wasirrevocable and was a valid trust under the laws ofthe state of A’s domicile. A’s account balance inPlan X was includible in A’s gross estate under§ 2039.

(ii) Under the terms of Trust P, all trust incomeis payable annually to B, and no one has the powerto appoint Trust P principal to any person other thanB. A’s children, who are all younger than B, are thesole remainder beneficiaries of the Trust P. No otherperson has a beneficial interest in Trust P. Under theterms of the Trust P, B has the power, exercisableannually, to compel the trustee to withdraw fromA’s account balance in Plan X an amount equal tothe income earned on the assets held in A’s accountin Plan X during the calendar year and to distributethat amount through Trust P to B. Plan X containsno prohibition on withdrawal from A’s account ofamounts in excess of the annual required minimum

May 13, 2002 867 2002–19 I.R.B.

distributions under section 401(a)(9). In accordancewith the terms of Plan X, the trustee of Trust Pelects, in order to satisfy section 401(a)(9), toreceive annual required minimum distributionsusing the life expectancy rule in section401(a)(9)(B)(iii) for distributions over a distributionperiod equal to B’s life expectancy. If B exercisesthe withdrawal power, the trustee must withdrawfrom A’s account under Plan X the greater of theamount of income earned in the account during thecalendar year or the required minimum distribution.However, under the terms of Trust P, and applicablestate law, only the portion of the Plan X distributionreceived by the trustee equal to the income earnedby A’s account in Plan X is required to be distrib-uted to B (along with any other trust income.)

(iii) Because some amounts distributed from A’saccount in Plan X to Trust P may be accumulated inTrust P during B’s lifetime for the benefit of A’schildren, as remaindermen beneficiaries of Trust P,even though access to those amounts are delayeduntil after B’s death, A’s children are beneficiaries ofA’s account in Plan X in addition to B and B is notthe sole designated beneficiary of A’s account. Thusthe designated beneficiary used to determine the dis-tribution period from A’s account in Plan X is thebeneficiary with the shortest life expectancy. B’s lifeexpectancy is the shortest of all the potential benefi-ciaries of the testamentary trust’s interest in A’saccount in Plan X (including remainder beneficia-ries). Thus, the distribution period for purposes ofsection 401(a)(9)(B)(iii) is B’s life expectancy.Because B is not the sole designated beneficiary ofthe testamentary trust’s interest in A’s account inPlan X, the special rule in 401(a)(9)(B)(iv) is notavailable and the annual required minimum distribu-tions from the account to Trust M must begin nolater than the end of the calendar year immediatelyfollowing the calendar year of A’s death.

Example 2. (i) The facts are the same asExample 1 except that the testamentary trust instru-ment provides that all amounts distributed from A’saccount in Plan X to the trustee while B is alive willbe paid directly to B upon receipt by the trustee ofTrust P.

(ii) In this case, B is the sole designated benefi-ciary of A’s account in Plan X for purposes of deter-mining the designated beneficiary under section401(a)(9)(B)(iii) and (iv). No amounts distributedfrom A’s account in Plan X to Trust P are accumu-lated in Trust P during B’s lifetime for the benefit ofany other beneficiary. Therefore, the residuary ben-eficiaries of Trust P are mere potential successors toB’s interest in Plan X. Because B is the sole benefi-ciary of the testamentary trust’s interest in A’saccount in Plan X, the annual required minimumdistributions from A’s account to Trust P must beginno later than the end of the calendar year in whichA would have attained age 70½, rather than the cal-endar year immediately following the calendar yearof A’s death.

Q–8. If a portion of an employee’sindividual account is not vested as of theemployee’s required beginning date, howis the determination of the required mini-mum distribution affected?

A–8. If the employee’s benefit is in theform of an individual account, the benefitused to determine the required minimum

distribution for any distribution calendaryear will be determined in accordancewith A–1 of this section without regard towhether or not all of the employee’s ben-efit is vested. If any portion of theemployee’s benefit is not vested, distribu-tions will be treated as being paid fromthe vested portion of the benefit first. If,as of the end of a distribution calendaryear (or as of the employee’s requiredbeginning date, in the case of the employ-ee’s first distribution calendar year), thetotal amount of the employee’s vestedbenefit is less than the required minimumdistribution for the calendar year, only thevested portion, if any, of the employee’sbenefit is required to be distributed by theend of the calendar year (or, if applicable,by the employee’s required beginningdate). However, the required minimumdistribution for the subsequent distribu-tion calendar year must be increased bythe sum of amounts not distributed inprior calendar years because the employ-ee’s vested benefit was less than therequired minimum distribution.

Q–9. Which amounts distributed froman individual account are taken intoaccount in determining whether section401(a)(9) is satisfied and which amountsare not taken into account in determiningwhether section 401(a)(9) is satisfied?

A–9. (a) General rule. Except as pro-vided in paragraph (b), all amounts dis-tributed from an individual account aredistributions that are taken into account indetermining whether section 401(a)(9) issatisfied, regardless of whether theamount is includible in income. Thus, forexample, amounts that are excluded fromincome as recovery of investment in thecontract under section 72 are taken intoaccount for purposes of determiningwhether section 401(a)(9) is satisfied fora distribution calendar year. Similarly,amounts excluded from income as netunrealized appreciation on employersecurities also are amounts distributed forpurposes of determining if section401(a)(9) is satisfied.

(b) Exceptions. The following amountsare not taken into account in determiningwhether the required minimum amounthas been distributed for a calendar year:

(1) Elective deferrals and employeecontributions that, pursuant to § 1.415–6(b)(6)(iv), are returned (together withthe income allocable to these corrective

distributions) as a result of the applicationof the section 415 limitations.

(2) Corrective distributions of excessdeferrals as described in § 1.402(g)–1(e)(3), together with the income allo-cable to these distributions.

(3) Corrective distributions of excesscontributions under a qualified cash ordeferred arrangement under section401(k)(8) and excess aggregate contribu-tions under section 401(m)(6), togetherwith the income allocable to these distri-butions.

(4) Loans that are treated as deemeddistributions pursuant to section 72(p).

(5) Dividends described in section404(k) that are paid on employer securi-ties. (Amounts paid to the plan that, pur-suant to section 404(k)(2)(A)(iii)(II), areincluded in the account balance and sub-sequently distributed from the accountlose their character as dividends.)

(6) The costs of life insurance cover-age (P.S. 58 costs).

(7) Similar items designated by theCommissioner in revenue rulings, notices,and other guidance published in the Inter-nal Revenue Bulletin. See § 601.601(d)(2)(ii)(b) of this chapter.

§ 1.401(a)(9)–6T Required minimum dis-tributions for defined benefit plans andannuity contracts (temporary).

Q–1. How must distributions under adefined benefit plan be paid in order tosatisfy section 401(a)(9)?

A–1. (a) General rules. In order to sat-isfy section 401(a)(9), except as other-wise provided in this A–1, distributionsunder a defined benefit plan must be paidin the form of periodic annuity paymentsfor the employee’s life (or the joint livesof the employee and beneficiary) or overa period certain that does not exceed themaximum length of the period certaindetermined in accordance with A–3 ofthis section. The interval between pay-ments for the annuity must be uniformover the entire distribution period andmust not exceed one year. Once paymentshave commenced over a period certain,the period certain may not be changedeven if the period certain is shorter thanthe maximum permitted. Life annuitypayments must satisfy the minimum dis-tribution incidental benefit requirementsof A–2 of this section. Except as other-wise provided in A–4(b) of this section,

2002–19 I.R.B. 868 May 13, 2002

all payments (life and period certain) alsomust either be nonincreasing or increaseonly in accordance with one of more ofthe following:

(1) With an annual percentage increasethat does not exceed the annual percent-age increase in a cost-of-living index thatis based on prices of all items and issuedby the Bureau of Labor Statistics;

(2) To the extent of the reduction inthe amount of the employee’s paymentsto provide for a survivor benefit upondeath, but only if the beneficiary whoselife was being used to determine theperiod described in sect ion401(a)(9)(A)(ii) over which paymentswere being made dies or is no longer theemployee’s beneficiary pursuant to aqualified domestic relations order withinthe meaning of section 414(p);

(3) To provide cash refunds ofemployee contributions upon the employ-ee’s death; or

(4) To pay increased benefits thatresult from a plan amendment.

(b) Life annuity with period certain.The annuity may be a life annuity (orjoint and survivor annuity) with a periodcertain if the life (or lives, if applicable)and period certain each meet the require-ments of paragraph (a) of this A–1. Forpurposes of this section, if distributionsare permitted to be made over the lives ofthe employee and the designated benefi-ciary, references to a life annuity includea joint and survivor annuity.

(c) Annuity commencement. (1) Annu-ity payments must commence on orbefore the employee’s required beginningdate (within the meaning of A–2 of§ 1.401(a)(9)–2). The first payment,which must be made on or before theemployee’s required beginning date, mustbe the payment which is required for onepayment interval. The second paymentneed not be made until the end of the nextpayment interval even if that paymentinterval ends in the next calendar year.Similarly, in the case of distributionscommencing after death in accordancewith section 401(a)(9)(B)(iii) and (iv), thefirst payment, which must be made on orbefore the date determined under A–3(a)or (b) (whichever is applicable) of§ 1.401(a)(9)–3, must be the paymentwhich is required for one payment inter-val. Payment intervals are the periods forwhich payments are received, e.g.,

bimonthly, monthly, semi-annually, orannually. All benefit accruals as of thelast day of the first distribution calendaryear must be included in the calculationof the amount of annuity payments forpayment intervals ending on or after theemployee’s required beginning date.

(2) This paragraph (c) is illustrated bythe following example:

Example. A defined benefit plan (Plan X) pro-vides monthly annuity payments of $500 for the lifeof unmarried participants with a 10-year period cer-tain. An unmarried, retired participant (A) in Plan Xattains age 70½ in 2005. In order to meet therequirements of this paragraph, the first monthlypayment of $500 must be made on behalf of A on orbefore April 1, 2006, and the payments must con-tinue to be made in monthly payments of $500thereafter for the life and 10-year period certain.

(d) Lump sum distributions. In the caseof a lump sum distribution of an employ-ee’s entire accrued benefit during a distri-bution calendar year, the amount that isthe required minimum distribution for thedistribution calendar year (and thus noteligible for rollover under section 402(c))is determined using either the rule inparagraph (d)(1) or (d)(2) of this A–1.

(1) The portion of the single sum dis-tribution that is a required minimum dis-tribution is determined by treating thesingle sum distribution as a distributionfrom an individual account plan and treat-ing the amount of the single sum distribu-tion as the employee’s account balance asof the end of the relevant valuation calen-dar year. If the single sum distribution isbeing made in the calendar year contain-ing the required beginning date and therequired minimum distribution for theemployee’s first distribution calendar yearhas not been distributed, the portion ofthe single sum distribution that representsthe required minimum distribution for theemployee’s first and second distributioncalendar years is not eligible for rollover.

(2) The portion of the single sum dis-tribution that is a required minimum dis-tribution is permitted to be determined byexpressing the employee’s benefit as anannuity that would satisfy this sectionwith an annuity starting date as of thefirst day of the distribution calendar yearfor which the required minimum distribu-tion is being determined, and treating oneyear of annuity payments as the requiredminimum distribution for that year, andnot eligible for rollover. If the single sumdistribution is being made in the calendaryear containing the required beginning

date and the required minimum distribu-tion for the employee’s first distributioncalendar year has not been made, the ben-efit must be expressed as an annuity withan annuity starting date as of the first dayof the first distribution calendar year andthe payments for the first two calendaryears would be treated as required mini-mum distributions, and not eligible forrollover.

(e) Death benefits. The rules prohibit-ing increasing payments under an annuityapply to payments made upon the deathof the employee. The preceding sentencewill not apply to an increase due to anancillary death benefit described in thisparagraph (e). A death benefit withrespect to an employee’s benefit is anancillary death benefit for purposes ofthis A–1 if—

(1) It is not paid as part of the employ-ee’s accrued benefit or under any optionalform of the employee’s benefit, and

(2) The death benefit, together withany other potential payments with respectto the employee’s benefit that may beprovided to a survivor, satisfy the inci-dental benefit requirement of § 1.401–1(b)(1)(i),

(f) Additional guidance. Additionalguidance regarding how distributionsunder a defined benefit plan must be paidin order to satisfy section 401(a)(9) maybe issued by the Commissioner in rev-enue rulings, notices, or other guidancepublished in the Internal Revenue Bulle-tin. See § 601.601(d)(2)(ii)(b) of thischapter.

Q–2. How must distributions in theform of a life (or joint and survivor)annuity be made in order to satisfy theminimum distribution incidental benefit(MDIB) requirement of sect ion401(a)(9)(G) and the distribution compo-nent of the incidental benefit requirementof § 1.401–1(b)(1)(i)?

A–2. (a) Life annuity for employee. Ifthe employee’s benefit is payable in theform of a life annuity for the life of theemployee satisfying section 401(a)(9)without regard to the MDIB requirement,the MDIB requirement of section401(a)(9)(G) will be satisfied.

(b) Joint and survivor annuity, spousebeneficiary. If the employee’s sole benefi-ciary, as of the annuity starting date forannuity payments, is the employee’s

May 13, 2002 869 2002–19 I.R.B.

spouse and the distributions satisfy sec-tion 401(a)(9) without regard to theMDIB requirement, the distributions tothe employee will be deemed to satisfythe MDIB requirement of section401(a)(9)(G). For example, if an employ-ee’s benefit is being distributed in theform of a joint and survivor annuity forthe lives of the employee and the employ-ee’s spouse and the spouse is the solebeneficiary of the employee, the amountof the periodic payment payable to thespouse is permitted to be 100 percent ofthe annuity payment payable to theemployee regardless of the difference inthe ages between the employee and theemployee’s spouse. The amount of theannuity payments must satisfy A–1 of thissection (or A–4 of this section, if appli-cable).

(c) Joint and survivor annuity, non-spouse beneficiary—(1) Explanation ofrule. If distributions commence under adistribution option that is in the form of ajoint and survivor annuity for the jointlives of the employee and a beneficiaryother than the employee’s spouse, theminimum distribution incidental benefitrequirement will not be satisfied as of thedate distributions commence unless thedistribution option provides that annuitypayments to be made to the employee onand after the employee’s required begin-ning date will satisfy the conditions ofthis paragraph (c). The periodic annuitypayment payable to the survivor must notat any time on and after the employee’s

required beginning date exceed the appli-cable percentage of the annuity paymentpayable to the employee using the table inparagraph (c)(2) of this A–2. The appli-cable percentage is based on the excess ofthe age of the employee on the employ-ee’s birthday in a calendar year over theage of the beneficiary as of the beneficia-ry’s birthday in that calendar year. Addi-tionally, the amount of the annuity pay-ments must satisfy A–1 of this section (orA–4 of this section, if applicable). In thecase of an annuity which provides forincreasing payments, the requirement ofthis paragraph (c) will be satisfied if theincrease is determined in the same man-ner for the employee and the beneficiary.

(2) Table.

Excess of age of employeeover age of beneficiary Applicable percentage

10 years or less 100%

11 96%

12 93%

13 90%

14 87%

15 84%

16 82%

17 79%

18 77%

19 75%

20 73%

21 72%

22 70%

23 68%

24 67%

25 66%

26 64%

27 63%

28 62%

29 61%

30 60%

31 59%

32 59%

33 58%

34 57%

35 56%

2002–19 I.R.B. 870 May 13, 2002

Excess of age of employeeover age of beneficiary Applicable percentage

36 56%

37 55%

38 55%

39 54%

40 54%

41 53%

42 53%

43 53%

44 and greater 52%

(3) Example. This paragraph (c) isillustrated by the following example:

Example. Distributions commence on January 1,2003, to an employee (Z), born March 1, 1937, afterretirement at age 65. Z’s daughter (Y), born Febru-ary 5, 1967, is Z’s beneficiary. The distributions arein the form of a joint and survivor annuity for thelives of Z and Y with payments of $500 a month toZ and upon Z’s death of $500 a month to Y, i.e., theprojected monthly payment to Y is 100 percent ofthe monthly amount payable to Z. There is no pro-vision under the option for a change in the projectedpayments to Y, and corresponding increase to Z, asof April 1, 2008, Z’s required beginning date.Accordingly, under A–10 of this section, compliancewith the rules of this section is determined as of theannuity starting date. Consequently, as of January 1,2003 (the annuity starting date), the plan does notsatisfy the MDIB requirement because, as of suchdate, the distribution option provides that, as of Z’srequired beginning date, the monthly payment to Yupon Z’s death will exceed 60 percent of Z’smonthly payment (the maximum percentage for adifference of ages of 30 years).

(d) Period certain and annuity fea-tures. If a distribution form includes a lifeannuity and a period certain, the amountof the annuity payments payable to thebeneficiary need not be reduced duringthe period certain, but in the case of ajoint and survivor annuity with a periodcertain, the amount of the annuity pay-ments payable to the beneficiary must sat-isfy paragraph (c) of this A–2 after theexpiration of the period certain.

(e) Deemed satisfaction of incidentalbenefit rule. Except in the case of distri-butions with respect to an employee’sbenefit that include an ancillary deathbenefit described in paragraph A–1(e) ofthis section, to the extent the incidentalbenefit requirement of § 1.401–1(b)(1)(i)requires a distribution, that requirement isdeemed to be satisfied if distributions sat-isfy the minimum distribution incidental

benefit requirement of this A–2. If theemployee’s benefits include an ancillarydeath benefit described in paragraphA–1(e) of this section, the benefits mustbe distributed in accordance with the inci-dental benefit requirement described in§ 1.401–1(b)(1)(i) and must also satisfythe minimum distribution incidental ben-efit requirement of this A–2.

Q–3. How long is a period certainunder a defined benefit plan permitted toextend?

A–3. (a) Distributions commencingduring the employee’s life. The periodcertain for any annuity distributions com-mencing during the life of the employeewith an annuity starting date on or afterthe employee’s required beginning dategenerally is not permitted to exceed theapplicable distribution period for theemployee (determined in accordance withthe Uniform Lifetime Table in A–2 of§ 1.401(a)(9)–9) for the calendar year thatcontains the annuity starting date. SeeA–10 for the rule for annuity paymentswith an annuity starting date before therequired beginning date. However, if theemployee’s sole beneficiary is theemployee’s spouse and the annuity pro-vides only a period certain and no lifeannuity, the period certain is permitted tobe as long as the joint life and last survi-vor expectancy of the employee and theemployee’s spouse, if longer than theapplicable distribution period for theemployee.

(b) Distributions commencing after theemployee’s death. (1) If annuity distribu-tions commence after the death of theemployee under the life expectancy rule(under section 401(a)(9)(B)(iii) or (iv)),the period certain for any distributions

commencing after death cannot exceedthe applicable distribution period deter-mined under A–5(b) of § 1.401(a)(9)–5for the distribution calendar year that con-tains the annuity starting date.

(2) If the annuity starting date is in acalendar year before the first distributioncalendar year, the period certain may notexceed the life expectancy of the desig-nated beneficiary using the beneficiary’sage in the year that contains the annuitystarting date.

Q–4. Will a plan fail to satisfy section401(a)(9) merely because distributionsare made from an annuity contract whichis purchased from an insurance company?

A–4. (a) General rule. A plan will notfail to satisfy section 401(a)(9) merelybecause distributions are made from anannuity contract which is purchased withthe employee’s benefit by the plan froman insurance company, as long as the pay-ments satisfy the requirements of this sec-tion. If the annuity contract is purchasedafter the required beginning date, the firstpayment interval must begin on or beforethe purchase date and the paymentrequired for one payment interval must bemade no later than the end of such pay-ment interval. If the payments actuallymade under the annuity contract do notmeet the requirements of section401(a)(9), the plan fails to satisfy section401(a)(9).

(b) Permitted increases. In the case ofan annuity contract purchased from aninsurance company with an employee’saccount balance under a defined contribu-tion plan or under a section 403(a) annu-ity plan, if the total future expected pay-ments (determined in accordance withparagraph (c)(3) of this A–4) exceed the

May 13, 2002 871 2002–19 I.R.B.

account value being annuitized, the pay-ments under the annuity will not fail tosatisfy the nonincreasing paymentrequirement in A–1(a) of this sectionmerely because the payments areincreased in accordance with one or moreof the following —

(1) By a constant percentage, appliednot less frequently than annually;

(2) To provide a payment upon thedeath of the employee equal to the excessof the account value being annuitizedover the total of payments before thedeath of the employee.

(3) As a result of dividend payments orother payments that result from actuarialgains, but only if actuarial gain is mea-sured no less frequently than annually andthe resulting dividend payments or otherpayments are either paid no later than theyear following the year for which theactuarial experience is measured or paidin the same form as the payment of theannuity over the remaining period of theannuity (beginning no later than the yearfollowing the year for which the actuarialexperience is measured);

(4) As a final payment under the annu-ity contract, but only if the payment doesnot exceed the total future expected pay-ments as of the date of the payment; or

(5) As a partial distribution under thecontract, but only if the contract providesfor a final payment as of the date of par-tial distribution that satisfies paragraph(b)(4) of this A–4 and the future pay-ments under the contract are reduced bymultiplying the otherwise applicablefuture payments by a fraction, thenumerator of which is the excess of thatfinal payment over the amount of the par-tial distribution and the denominator ofwhich is the amount of that final pay-ment. For the purpose of determining thisratio, the denominator is reduced by theamount of any regularly scheduled pay-ment due on the date of the partial distri-bution.

(c) Definitions. For purposes of thisA–4, the following definitions apply —

(1) Account value being annuitizedmeans the value of the employee’s entireinterest (within the meaning of A–12 ofthis section) being annuitized (valued asof the date annuity payments commence)or, in the case of a defined contributionplan, the value of the employee’s account

balance used to purchase an immediateannuity under the contract.

(2) Actuarial gain means the differencebetween the actuarial assumptions used inpricing (i.e., investment return, mortality,expense, and other similar assumptions)and the actual experience with respect tothose assumptions. Actuarial gain alsoincludes differences between the actuarialassumptions used in pricing when anannuity was purchased and actuarialassumptions used in pricing annuities atthe time the actuarial gain is determined.

(3) Total future expected paymentsmeans the total future payments to bemade under the annuity contract as of thedate of the determination, calculatedusing the Single Life Table in A–1 of§ 1.401(a)(9)–9 (or, if applicable, theJoint and Last Survivor Table in A–3 of in§ 1.401(a)(9)–9) for annuitants who arestill alive, without regard to any increasesin annuity payments after the date ofdetermination, and taking into accountany remaining period certain.

(d) Examples. This A–4 is illustratedby the following examples:

Example 1. A participant (Z1) in defined contri-bution plan X attains age 70 on March 5, 2005, andthus, attains age 70½ in 2005. Z1 elects to purchaseannuity Contract Y1 from Insurance Company W in2005. Contract Y1 is a life annuity contract with a10–year period certain. Contract Y1 provides for aninitial annual payment calculated with an assumedinterest rate (AIR) of 3 percent. Subsequent pay-ments are determined by multiplying the prior year’spayment by a fraction the numerator of which is 1plus the actual return on the separate account assetsunderlying Contract Y1 since the preceding paymentand the denominator of which is 1 plus the AIR dur-ing that period. The value of Z1’s account balance inPlan X at the time of purchase is $105,000, and thepurchase price of Contract Y1 is $105,000. ContractY1 provides Z1 with an initial payment of $7,200 atthe time of purchase in 2005. The total futureexpected payments to Z1 under Contract Y1 are$122,400, calculated as the initial payment of$7,200 multiplied by the age 70 life expectancy of17. Because the total future expected payments onthe purchase date exceed the account value used topurchase Contract Y1 and payments may onlyincrease as a result of actuarial gain, with suchincreases, beginning no later than the next year, paidin the same form as the payment of the annuity overthe remaining period of the annuity, distributionsreceived by Z1 from Contract Y1 meet the require-ments under paragraph (b)(3) of this A–4.

Example 2. A participant (Z2) in defined contri-bution plan X attains age 70 on May 1, 2005, andthus, attains age 70½ in 2005. Z2 elects to purchaseannuity Contract Y2 from Insurance Company W in2005. Contract Y2 is a participating life annuitycontract with a 10-year period certain. Contract Y2provides for level annual payments with dividendspaid in a lump sum in the year after the year for

which the actuarial experience is measured or paidout levelly beginning in the year after the year forwhich the actuarial gain is measured over theremaining lifetime and period certain, i.e., theperiod certain ends at the same time as the originalperiod certain. Dividends are determined annuallyby the Board of Directors of Company W basedupon a comparison of actual actuarial experience toexpected actuarial experience in the past year. Thevalue of Z2’s account balance in Plan X at the timeof purchase is $265,000, and the purchase price ofContract Y2 is $265,000. Contract Y2 provides Z2with an initial payment of $16,000 in 2005. Thetotal future expected payments to Z2 under ContractY2 are calculated as the annual initial payment of$16,000 multiplied by the age 70 life expectancy of17 for a total of $272,000. Because the total futureexpected payments on the purchase date exceeds theaccount value used to purchase Contract Y2 andpayments may only increase as a result of actuarialgain, with such increases, beginning no later thanthe next year, paid in the same form as the paymentof the annuity over the remaining period of theannuity, distributions received by Z2 from ContractY2 meet the requirements under paragraph (b)(3) ofthis A–4.

Example 3. The facts are the same as in Example2 except that the annuity provides a dividend accu-mulation option under which Z2 may defer receiptof the dividends to a time selected by Z2. Becausethe dividend accumulation option permits dividendsto be paid later than the end of the year followingthe year for which the actuarial experience is mea-sured or as a stream of payments that only increaseas a result of actuarial gain, with such increasesbeginning no later than the next year, paid in thesame form as the payment of the annuity over theremaining period of the annuity in Example 2, thedividend accumulation option does not meet therequirements of paragraph (b)(3) of this A–4. Nei-ther does the dividend accumulation option fitwithin any of the other increases described in para-graph (b) of this A–4. Accordingly, the dividendaccumulation option causes the contract, and conse-quently any distributions from the contract, to fail tomeet the requirements of this A–4 and thus fail tosatisfy the requirements of section 401(a)(9).

Example 4. The facts are the same as in Example2 except that the annuity provides an option underwhich actuarial gain under the contract is used toprovide additional death benefit protection for Z2.Because this option permits payments as a result ofactuarial gain to be paid later than the end of theyear following the year for which the actuarial expe-rience is measured or as a stream of payments thatonly increase as a result of actuarial gain, with suchincreases beginning no later than the next year, paidin the same form as the payment of the annuity overthe remaining period of the annuity in Example 2,the option does not meet the requirements of para-graph (b)(3) of this A–4. Neither does the option fitwithin any of the other increases described in para-graph (b) of this A–4. Accordingly, the addition ofthe option causes the contract, and consequently anydistributions from the contract, to fail to meet therequirements of this A–4 and thus fail to satisfy therequirements of section 401(a)(9).

Example 5. A participant (Z3) in defined contri-bution plan X attains age 70½ in 2005. Z3 elects to

2002–19 I.R.B. 872 May 13, 2002

purchase annuity contract Y3 from Insurance Com-pany W. Contract Y3 is a life annuity contract witha 20-year period certain (which does not exceed themaximum period certain permitted under A–3(a) ofthis section) with fixed annual payments increasing3 percent each year. The value of Z3’s account bal-ance in Plan X at the time of purchase is $110,000,and the purchase price of Contract Y3 is $110,000.Contract Y3 provides Z3 with an initial payment of$6,000 at the time of purchase in 2005. The totalfuture expected payments to Z3 under Contract Y3are $120,000, calculated as the initial annual pay-ment of $6,000 multiplied by the period certain of20 years. Because the total future expected pay-ments on the purchase date exceed the account valueused to purchase Contract Y3 and payments onlyincrease as a constant percentage applied not lessfrequently than annually, distributions received byZ3 from Contract Y3 meet the requirements underparagraph (b)(1) of this A–4.

Example 6. The facts are the same as in Example5 except that the initial payment is $5,400 and theannual rate of increase is 4 percent. In this example,the total future expected payments are $108,000,calculated as the initial payment of $5,400 multi-plied by the period certain of 20 years. Because thetotal future expected payments are less than theaccount value of $110,000 used to purchase Con-tract Y3, distributions received by Z3 do not meetthe requirements under paragraph (b) of this A–4and thus fail to meet the requirements of section401(a)(9).

Example 7. (i) A participant (Z4) in defined con-tribution Plan X attains age 78 in 2005. Z4 elects topurchase Contract Y4 from Insurance Company W.Contract Y4 provides for fixed annual payments for20 years (which does not exceed the maximumperiod certain permitted under A–3(a) of this sec-tion) and provides that, on any payment date, beforereceiving his payment due on that date, Z4 maycancel Contract Y4 and receive as a final paymentan amount equal to his remaining payments dis-counted with interest at 4 percent. The value of Z4’saccount balance in Plan X at the time of purchase is$500,000, and the purchase price of Contract Y4 is$500,000. Contract Y4 provides Z4 with an initialpayment in 2005 of $35,376.

(ii) Under Contract Y4, the amount that Z4could receive upon cancellation of Contract Y4 as afinal payment, for all possible cancellation dates,will always be less than the total future expectedpayments on such cancellation date. This is sobecause the total future expected payments on anysuch cancellation date is equal to the remaining pay-ments on such date, not discounted, an amountalways greater than the final payment amount ofthese same remaining payments, discounted at 4percent.

(iii) The total future expected payments to Z4under Y4 are $707,520, calculated as the annualizedinitial payment of $35,376 multiplied by the periodcertain of 20 years. Because the total futureexpected payments on the purchase date exceed theaccount value used to purchase Contract Y4 and it isnot possible for a final payment under Contract Y4to ever exceed the total future expected payments onthe day of such final payment, distributions receivedby Z4 under Contract Y4 meet the requirementsunder paragraph (b)(4) of this A–4.

(iv) As an illustration of the above, if ParticipantZ4 were to elect to cancel Contract Y4 on the dayhe was due to receive his eleventh payment, hiscontractual final payment would be $298,408(including the $35,376 he was due to receive on thatday) which is less than his total future expected pay-ments on that date ($353,760). These amounts aredetermined as follows. On the day Z4 was to receivehis eleventh payment, Z4 was entitled to receive tenfuture payments of $35,376 (including the paymenthe was due to receive on that day). The discountedvalue of an annuity of ten payments of $35,376,with the first payment due on the date of the calcu-lation of the discounted value, and a discount rate of4 percent, is $298,408. The product of the paymentamount of $35,376 multiplied by 10, the number offuture payments to which Z4 would be entitled onthe day Z4 was to receive the eleventh payment, is$353,760.

Example 8. (i) The facts are the same as inExample 7 except that the annuity provides anoption for partial distributions of less than the finalpayment amount (the maximum distribution), withpayments following such a partial distributionreduced by multiplying the otherwise applicablefuture payments by a fraction, the numerator ofwhich is the excess of the final payment amountover the amount of the partial distribution and thedenominator of which is the amount of that finalpayment. For the purposes of determining this ratio,the denominator is reduced by the amount of anyregularly scheduled payment due on the date of par-tial distribution. This partial distribution optionmeets the requirements of paragraph (b)(5) of thisA–4.

(ii) To illustrate the workings of this partial dis-tribution option, assume Z4 takes a distribution of$100,000 on the date he was to receive his eleventhpayment of $35,376. In such a case, under this par-tial distribution option, his remaining nine pay-ments, absent any other extraordinary distributions,will be reduced to $26,685. This amount is deter-mined as follows. The numerator of the ratiodescribed in the paragraph above is equal to$198,408 (that is, the excess of a total distribution of$298,408 over the partial distribution of $100,000).The denominator of the ratio described in the para-graph above is equal to $263,032 (that is, the maxi-mum distribution on the date of the partial distribu-tion of $298,408 (see Example 6) less the regularlyscheduled payment of $35,376). Thus, future pay-ments must be multiplied by 75.43 percent (that is,$198,408 divided by $263,032). Thus, his futurepayments must be $26,685 (that is, $35,376 multi-plied by 75.43 percent).

Example 9. (i) A participant (Z5) in defined con-tribution plan X attains age 70½ in 2005. Z5 electsto purchase annuity Contract Y5 from InsuranceCompany W in 2005. Contract Y5 is a participatinglife annuity contract with a 20-year period certain.Contract Y5 provides an initial payment at the timeof purchase of 5 percent of the purchase price, asecond payment one year from the time of purchaseof two percent of the purchase price, and 18 suc-ceeding annual payments each increasing at a con-stant percentage rate of 16 percent from the preced-ing payment.

(ii) Contract Y5 fails to meet the requirements ofparagraph (b) of this A–4, and thus fails to satisfythe requirements of section 401(a)(9), because the

expected total payments without regard to anyincreases in the annuity payment is only 43 percentof the purchase price (that is, an amount not exceed-ing the account value used to purchase the annuity),calculated as 5 percent of the purchase price in yearone and two percent of the purchase price in each ofyears two through twenty (or, .05 multiplied by 1year plus .02 multiplied by 19 years).

Q–5. In the case of annuity distribu-tions under a defined benefit plan, howmust additional benefits that accrue afterthe employee’s first distribution calendaryear be distributed in order to satisfy sec-tion 401(a)(9)?

A–5. (a) In the case of annuity distri-butions under a defined benefit plan, ifany additional benefits accrue in a calen-dar year after the employee’s first distri-bution calendar year, distribution of theamount that accrues in a calendar yearmust commence in accordance with A–1of this section beginning with the firstpayment interval ending in the calendaryear immediately following the calendaryear in which such amount accrues.

(b) A plan will not fail to satisfy sec-tion 401(a)(9) merely because there is anadministrative delay in the commence-ment of the distribution of the additionalbenefits accrued in a calendar year, pro-vided that the actual payment of suchamount commences as soon as practi-cable. However, payment must com-mence no later than the end of the firstcalendar year following the calendar yearin which the additional benefit accrues,and the total amount paid during suchfirst calendar year must be no less thanthe total amount that was required to bepaid during that year under A–5(a) of thissection.

Q–6. If a portion of an employee’sbenefit is not vested as of December 31of a distribution calendar year, how is thedetermination of the required minimumdistribution affected?

A–6 In the case of annuity distribu-tions from a defined benefit plan, if anyportion of the employee’s benefit is notvested as of December 31 of a distribu-tion calendar year, the portion that is notvested as of such date will be treated asnot having accrued for purposes of deter-mining the required minimum distributionfor that distribution calendar year. Whenan additional portion of the employee’sbenefit becomes vested, such portion willbe treated as an additional accrual. SeeA–5 of this section for the rules for dis-tributing benefits which accrue under a

May 13, 2002 873 2002–19 I.R.B.

defined benefit plan after the employee’sfirst distribution calendar year.

Q–7. If an employee (other than a5-percent owner) retires after the calendaryear in which the employee attains age70½, for what period must the employ-ee’s accrued benefit under a defined ben-efit plan be actuarially increased?

A–7. (a) Actuarial increase startingdate. If an employee (other than a5-percent owner) retires after the calendaryear in which the employee attains age70½ , in order to satisfy section401(a)(9)(C)(iii), the employee’s accruedbenefit under a defined benefit plan mustbe actuarially increased to take intoaccount any period after age 70½ inwhich the employee was not receivingany benefits under the plan. The actuarialincrease required to satisfy section401(a)(9)(C)(iii) must be provided for theperiod starting on the April 1 followingthe calendar year in which the employeeattains age 70½, or January 1, 1997, iflater.

(b) Actuarial increase ending date.The period for which the actuarialincrease must be provided ends on thedate on which benefits commence afterretirement in an amount sufficient to sat-isfy section 401(a)(9).

(c) Nonapplication to plan providingsame required beginning date for allemployees. If, as permitted under A–2(e)of § 1.401(a)(9)–2, a plan provides thatthe required beginning date for purposesof section 401(a)(9) for all employees isApril 1 of the calendar year following thecalendar year in which the employeeattains age 70½ (regardless of whetherthe employee is a 5-percent owner) andthe plan makes distributions in an amountsufficient to satisfy section 401(a)(9)using that required beginning date, noactuarial increase is required under sec-tion 401(a)(9)(C)(iii).

(d) Nonapplication to governmentaland church plans. The actuarial increaserequired under this A–7 does not apply toa governmental plan (within the meaningof section 414(d)) or a church plan. Forpurposes of this paragraph, the termchurch plan means a plan maintained bya church for church employees, and theterm church means any church (asdefined in section 3121(w)(3)(A)) or

qualified church-controlled organization(as defined in section 3121(w)(3)(B)).

Q–8. What amount of actuarialincrease is required under section401(a)(9)(C)(iii)?

A–8. In order to satisfy section401(a)(9)(C)(iii), the retirement benefitspayable with respect to an employee as ofthe end of the period for actuarialincreases (described in A–7 of this sec-tion) must be no less than: the actuarialequivalent of the employee’s retirementbenefits that would have been payable asof the date the actuarial increase mustcommence under paragraph (a) of A–7 ofthis section if benefits had commenced onthat date; plus the actuarial equivalent ofany additional benefits accrued after thatdate; reduced by the actuarial equivalentof any distributions made with respect tothe employee’s retirement benefits afterthat date. Actuarial equivalence is deter-mined using the plan’s assumptions fordetermining actuarial equivalence for pur-poses of satisfying section 411.

Q–9. How does the actuarial increaserequired under section 401(a)(9)(C)(iii)relate to the actuarial increase requiredunder section 411?

A–9. In order for any of an employee’saccrued benefit to be nonforfeitable asrequired under section 411, a defined ben-efit plan must make an actuarial adjust-ment to an accrued benefit the payment ofwhich is deferred past normal retirementage. The only exception to this rule is thatgenerally no actuarial adjustment isrequired to reflect the period duringwhich a benefit is suspended as permittedunder section 203(a)(3)(B) of theEmployee Retirement Income SecurityAct of 1974 (ERISA). The actuarialincrease required under sect ion401(a)(9)(C)(iii) for the period describedin A–7 of this section is generally thesame as, and not in addition to, the actu-arial increase required for the same periodunder section 411 to reflect any delay inthe payment of retirement benefits afternormal retirement age. However, unlikethe actuarial increase required under sec-tion 411, the actuarial increase requiredunder section 401(a)(9)(C)(iii) must beprovided even during any period duringwhich an employee’s benefit has beensuspended in accordance with ERISA sec-tion 203(a)(3)(B).

Q–10. What rule applies if distribu-tions commence to an employee on a datebefore the employee’s required beginningdate over a period permitted under section401(a)(9)(A)(ii) and the distribution formis an annuity under which distributionsare made in accordance with the provi-sions of A–1 (and if applicable A–4) ofthis section?

A–10. (a) General rule. If distributionscommence to an employee on an irrevo-cable basis (except for acceleration) on adate before the employee’s requiredbeginning date over a period permittedunder section 401(a)(9)(A)(ii) and thedistribution form is an annuity underwhich distributions are made in accor-dance with the provisions of A–1 (and, ifapplicable, A–4) of this section, the annu-ity starting date will be treated as therequired beginning date for purposes ofapplying the rules of this section and§ 1.401(a)(9)–2. Thus, for example, thedesignated beneficiary distributions willbe determined as of the annuity startingdate. Similarly, if the employee dies afterthe annuity starting date but before therequired beginning date determined underA–2 of § 1.401(a)(9)–2, after the employ-ee’s death, the remaining portion of theemployee’s interest must continue to bedistributed in accordance with this sectionover the remaining period over which dis-tributions commenced (single or jointlives or period certain, as applicable). Therules in § 1.401(a)(9)–3 and section401(a)(9)(B)(ii) or (iii) and (iv) do notapply.

(b) Period certain. If as of the employ-ee’s birthday in the year that contains theannuity starting date, the age of theemployee is under 70, the following ruleapplies in applying the rule in paragraph(a) of A–3 of this section. The applicabledistribution period for the employee(determined in accordance with the Uni-form Lifetime Table in A–2 of§ 1.401(a)(9)–9) is the distribution periodfor age 70 using the Uniform LifetimeTable in A–2 of § 1.401(a)(9)–9 plus theexcess of 70 over age of the employee asof the employee’s birthday in the yearthat contains the annuity starting date.

Q–11. What rule applies if distribu-tions commence on an irrevocable basis(except for acceleration) to the surviving

2002–19 I.R.B. 874 May 13, 2002

spouse of an employee over a period per-mitted under section 401(a)(9)(B)(iii)(II)before the date on which distributions arerequired to commence and the distribu-tion form is an annuity under which dis-tributions are made as of the date distri-butions commence in accordance with theprovisions of A–1 (and if applicable A–4)of this section?

A–11. If distributions commence to thesurviving spouse of an employee on anirrevocable basis (except for acceleration)over a period permitted under section401(a)(9)(B)(iii)(II) before the date onwhich distributions are required to com-mence and the distribution form is anannuity under which distributions aremade as of the date distributions com-mence in accordance with the provisionsof A–1 (and if applicable A–4) of thissection, distributions will be consideredto have begun on the actual commence-ment date for purposes of section401(a)(9)(B)(iv)(II). Consequently, insuch case, A–5 of § 1.401(a)(9)–3 andsection 401(a)(9)(B)(ii) and (iii) will notapply upon the death of the survivingspouse as though the surviving spousewere the employee. Instead, the annuitydistributions must continue to be made, inaccordance with the provisions of A–1(and if applicable A–4) of this sectionover the remaining period over which dis-tributions commenced (single life orperiod certain, as applicable).

Q–12. In the case of an annuity con-tract under an individual account planfrom which annuity payments have notcommenced to on an irrevocable basis(except for acceleration), how is section401(a)(9) satisfied with respect to theemployee’s or beneficiary’s entire interestunder the annuity contract for the periodprior to the date annuity payments socommence?

A–12. Prior to the date that annuitypayments commence on an irrevocablebasis (except for acceleration) under anindividual account plan from an annuitycontract, the interest of an employee orbeneficiary under that contract is treatedas an individual account for purposes ofsection 401(a)(9). Thus, the requiredminimum distribution for any year withrespect to that interest is determinedunder § 1.401(a)(9)–5 rather than thissection. For purposes of applying therules in § 1.401(a)(9)–5, the entire inter-

est under the annuity contract as ofDecember 31 of the relevant valuationcalendar year is treated as the accountbalance for the valuation calendar yeardescribed in A–3 of § 1.401(a)(9)–5. Theentire interest under an annuity contract isthe dollar amount credited to theemployee or beneficiary under the con-tract plus the actuarial value of any otherbenefits (such as minimum survivor ben-efits) that will be provided under the con-tract. See A–1 of § 1.401(a)(9)–5 for rulesrelating to the satisfaction of section401(a)(9) in the year that annuity pay-ments commence and A–2(a)(3) of§ 1.401(a)(9)–8.

§ 1.401(a)(9)–7 Rollovers and transfers.

Q–1. If an amount is distributed byone plan (distributing plan) and is rolledover to another plan, is the required mini-mum distribution under the distributingplan affected by the rollover?

A–1. No, if an amount is distributedby one plan and is rolled over to anotherplan, the amount distributed is still treatedas a distribution by the distributing planfor purposes of section 401(a)(9), not-withstanding the rollover. See A–1 of§ 1.402(c)–2 for the definition of a roll-over and A–7 of § 1.402(c)–2 for rules fordetermining the portion of any distribu-tion that is not eligible for rolloverbecause it is a required minimum distri-bution.

Q–2. If an amount is distributed byone plan (distributing plan) and is rolledover to another plan (receiving plan), howare the benefit and the required minimumdistribution under the receiving planaffected?

A–2. If an amount is distributed byone plan (distributing plan) and is rolledover to another plan (receiving plan), thebenefit of the employee under the receiv-ing plan is increased by the amount rolledover for purposes of determining therequired minimum distribution for thecalendar year immediately following thecalendar year in which the amount rolledover is distributed. If the amount rolledover is received after the last valuationdate in the calendar year under the receiv-ing plan, the benefit of the employee as ofsuch valuation date, adjusted in accor-dance with A–3 of § 1.401(a)(9)–5, willbe increased by the rollover amount val-ued as of the date of receipt. In addition,

if the amount rolled over is received in adifferent calendar year from the calendaryear in which it is distributed, the amountrolled over is deemed to have beenreceived by the receiving plan in the cal-endar year in which it was distributed.

Q–3. In the case of a transfer of anamount of an employee’s benefit fromone plan (transferor plan) to another plan(transferee plan), are there any specialrules for satisfying section 401(a)(9) ordetermining the employee’s benefit underthe transferor plan?

A–3. (a) In the case of a transfer of anamount of an employee’s benefit fromone plan (transferor plan) to another(transferee plan), the transfer is nottreated as a distribution by the transferorplan for purposes of section 401(a)(9).Instead, the benefit of the employee underthe transferor plan is decreased by theamount transferred. However, if any por-tion of an employee’s benefit is trans-ferred in a distribution calendar year withrespect to that employee, in order to sat-isfy section 401(a)(9), the transferor planmust determine the amount of therequired minimum distribution withrespect to that employee for the calendaryear of the transfer using the employee’sbenefit under the transferor plan beforethe transfer. Additionally, if any portionof an employee’s benefit is transferred inthe employee’s second distribution calen-dar year but on or before the employee’srequired beginning date, in order to sat-isfy section 401(a)(9), the transferor planmust determine the amount of the mini-mum distribution requirement for theemployee’s first distribution calendaryear based on the employee’s benefitunder the transferor plan before the trans-fer. The transferor plan may satisfy theminimum distribution requirement for thecalendar year of the transfer (and theprior year if applicable) by segregatingthe amount which must be distributedfrom the employee’s benefit and nottransferring that amount. Such amountmay be retained by the transferor planand must be distributed on or before thedate required under section 401(a)(9).

(b) For purposes of determining anyrequired minimum distribution for thecalendar year immediately following thecalendar year in which the transferoccurs, in the case of a transfer after thelast valuation date for the calendar year of

May 13, 2002 875 2002–19 I.R.B.

the transfer under the transferor plan, thebenefit of the employee as of such valua-tion date, adjusted in accordance withA–3 of § 1.401(a)(9)–5, will be decreasedby the amount transferred, valued as ofthe date of the transfer.

Q–4. If an amount of an employee’sbenefit is transferred from one plan(transferor plan) to another plan (trans-feree plan), how are the benefit and therequired minimum distribution under thetransferee plan affected?

A–4. In the case of a transfer from oneplan (transferor plan) to another (trans-feree plan), the benefit of the employeeunder the transferee plan is increased bythe amount transferred in the same man-ner as if it were a plan receiving a roll-over contribution under A–2 of this sec-tion.

Q–5. How is a spinoff, merger or con-solidation (as defined in § 1.414(l)–1)treated for purposes of determining anemployee’s benefit and required mini-mum distr ibut ion under sect ion401(a)(9)?

A–5. For purposes of determining anemployee’s benefit and required mini-mum distribution under section 401(a)(9),a spinoff, a merger, or a consolidation (asdefined in § 1.414(l)–1) will be treated asa transfer of the benefits of the employeesinvolved. Consequently, the benefit andrequired minimum distribution of eachemployee involved under the transferorand transferee plans will be determined inaccordance with A–3 and A–4 of this sec-tion.

§ 1.401(a)(9)–8 Special rules.

Q–1. What distribution rules apply ifan employee is a participant in more thanone plan?

A–1. If an employee is a participant inmore than one plan, the plans in whichthe employee participates are not permit-ted to be aggregated for purposes of test-ing whether the distribution requirementsof section 401(a)(9) are met. The distribu-tion of the benefit of the employee undereach plan must separately meet therequirements of section 401(a)(9). Forthis purpose, a plan described in section414(k) is treated as two separate plans, adefined contribution plan to the extentbenefits are based on an individualaccount and a defined benefit plan withrespect to the remaining benefits.

Q–2. If an employee’s benefit under adefined contribution plan is divided intoseparate accounts (or under a definedbenefit plan is divided into segregatedshares), do the distribution rules in sec-tion 401(a)(9) and these regulations applyseparately to each separate account?

A–2. (a) Defined contribution plan. (1)Except as otherwise provided in this A–2,if an employee’s benefit under a definedcontribution plan is divided into separateaccounts under the plan, the separateaccounts will be aggregated for purposesof satisfying the rules in section401(a)(9). Thus, except as otherwise pro-vided in this A–2, all separate accounts,including a separate account foremployee contributions under section72(d)(2), will be aggregated for purposesof section 401(a)(9).

(2) If the employee’s benefit in adefined contribution plan is divided intoseparate accounts and the beneficiarieswith respect to one separate account dif-fer from the beneficiaries with respect tothe other separate accounts of theemployee under the plan, for years subse-quent to the calendar year containing thedate on which the separate accounts wereestablished, or date of death if later, suchseparate account under the plan is notaggregated with the other separateaccounts under the plan in order to deter-mine whether the distributions from suchseparate account under the plan satisfysection 401(a)(9). Instead, the rules insection 401(a)(9) separately apply to suchseparate account under the plan. How-ever, the applicable distribution period foreach such separate account is determineddisregarding the other beneficiaries of theemployee’s benefit only if the separateaccount is established on a date no laterthan the last day of the year following thecalendar year of the employee’s death.For example, if, in the case of a distribu-tion described in section 401(a)(9)(B)(iii)and (iv), the only beneficiary of a sepa-rate account under the plan established ona date no later than the end of the yearfollowing the calendar year of theemployee’s death is the employee’s sur-viving spouse, and beneficiaries otherthan the surviving spouse are designatedwith respect to the other separateaccounts with respect to the employee,distribution of the spouse’s separateaccount under the plan need not com-

mence until the date determined under thefirst sentence in A–3(b) of § 1.401(a)(9)–3, even if distribution of the otherseparate accounts under the plan mustcommence at an earlier date. Similarly, inthe case of a distribution after the deathof an employee to which section401(a)(9)(B)(i) does not apply, distribu-tion from a separate account of anemployee established on a date no laterthan the end of the year following theyear of the employee’s death may bemade over a beneficiary’s life expectancyin accordance with section 401(a)(9)(B)(iii) and (iv) even though distributionsfrom other separate accounts under theplan with different beneficiaries are beingmade in accordance with the 5-year rulein section 401(a)(9)(B)(ii).

(3) A portion of an employee’s accountbalance under a defined contribution planis permitted to be used to purchase anannuity contract while another portionstays in the account. In that case, theremaining account under the plan must bedistributed in accordance with § 1.401(a)(9)–5 in order to satisfy section 401(a)(9)and the annuity payments under the annu-ity contract must satisfy § 1.401(a)(9)–6Tin order to satisfy section 401(a)(9).

(b) Defined benefit plan. The rules ofparagraph (a)(2) and (3) of this A–2 alsoapply to benefits under a defined benefitplan where the benefits under the plan areseparated into separate identifiable com-ponents which are separately distributed.

Q–3. What are separate accounts forpurposes of section 401(a)(9)?

A–3. For purposes of section401(a)(9), separate accounts in anemployee’s account are separate portionsof an employee’s benefit reflecting theseparate interests of the employee’s ben-eficiaries under the plan as of the date ofthe employee’s death for which separateaccounting is maintained. The separateaccounting must allocate all post-deathinvestment gains and losses, contribu-tions, and forfeitures, for the period priorto the establishment of the separateaccounts on a pro rata basis in a reason-able and consistent manner among theseparate accounts. However, once theseparate accounts are actually established,the separate accounting can provide forseparate investments for each separateaccount under which gains and lossesfrom the investment of the account are

2002–19 I.R.B. 876 May 13, 2002

only allocated to that account, or invest-ment gain or losses can continue to beallocated among the separate accounts ona pro rata basis. A separate accountingmust allocate any post-death distributionto the separate account of the beneficiaryreceiving that distribution.

Q–4. If a distribution is required to bemade to an employee by section401(a)(9)(A) or is required to be made toa surviving spouse under section401(a)(9)(B), must the distribution bemade even if the employee, or spousewhere applicable, fails to consent to a dis-tribution while a benefit is immediatelydistributable?

A–4. Yes, section 411(a)(11) and sec-tion 417(e) (see §§ 1.411(a)(11)–1(c)(2)and 1.417(e)–1(c)) require employee andspousal consent to certain distributions ofplan benefits while such benefits areimmediately distributable. If an employ-ee’s normal retirement age is later thanthe employee’s required beginning dateand, therefore, benefits are still immedi-ately distributable, the plan must, never-theless, distribute plan benefits to theemployee (or where applicable, to thespouse) in a manner that satisfies therequirements of section 401(a)(9). Section401(a)(9) must be satisfied even thoughthe employee (or spouse, where appli-cable) fails to consent to the distribution.In such a case, the plan may distribute inthe form of a qualified joint and survivorannuity (QJSA) or in the form of a quali-fied preretirement survivor annuity(QPSA), as applicable, and the consentrequirements of sections 411(a)(11) and417(e) are deemed to be satisfied if theplan has made reasonable efforts to obtainconsent from the employee (or spouse ifapplicable) and if the distribution other-wise meets the requirements of section417. If, because of section 401(a)(11)(B),the plan is not required to distribute in theform of a QJSA to a employee or a QPSAto a surviving spouse, the plan may dis-tribute the required minimum distributionamount to satisfy section 401(a)(9) andthe consent requirements of sections411(a)(11) and 417(e) are deemed to besatisfied if the plan has made reasonableefforts to obtain consent from theemployee (or spouse if applicable) and ifthe distribution otherwise meets therequirements of section 417.

Q–5. Who is an employee’s spouse orsurviving spouse for purposes of section401(a)(9)?

A–5. Except as otherwise provided inA–6(a) of this section (in the case of dis-tributions of a portion of an employee’sbenefit payable to a former spouse of anemployee pursuant to a qualified domes-tic relations order), for purposes of sec-tion 401(a)(9), an individual is a spouseor surviving spouse of an employee ifsuch individual is treated as the employ-ee’s spouse under applicable state law. Inthe case of distributions after the death ofan employee, for purposes of determiningwhether, under the life expectancy rule insection 401(a)(9)(B)(iii) and (iv), the pro-visions of section 401(a)(9)(B)(iv) apply,the spouse of the employee is determinedas of the date of death of the employee.

Q–6. In order to satisfy section401(a)(9), are there any special ruleswhich apply to the distribution of all or aportion of an employee’s benefit payableto an alternate payee pursuant to a quali-fied domestic relations order as defined insection 414(p) (QDRO)?

A–6. (a) A former spouse to whom allor a portion of the employee’s benefit ispayable pursuant to a QDRO will betreated as a spouse (including a survivingspouse) of the employee for purposes ofsection 401(a)(9), including the minimumdistribution incidental benefit require-ment, regardless of whether the QDROspecifically provides that the formerspouse is treated as the spouse for pur-poses of sections 401(a)(11) and 417.

(b)(1) If a QDRO provides that anemployee’s benefit is to be divided and aportion is to be allocated to an alternatepayee, such portion will be treated as aseparate account (or segregated share)which separately must satisfy the require-ments of section 401(a)(9) and may notbe aggregated with other separateaccounts (or segregated shares) of theemployee for purposes of satisfying sec-tion 401(a)(9). Except as otherwise pro-vided in paragraph (b)(2) of this A–6, dis-tribution of such separate accountallocated to an alternate payee pursuant toa QDRO must be made in accordancewith section 401(a)(9). For example, ingeneral, distribution of such account willsatisfy section 401(a)(9)(A) if requiredminimum distributions from such accountduring the employee’s lifetime begin not

later than the employee’s required begin-ning date and the required minimum dis-tribution is determined in accordancewith § 1.401(a)(9)–5 for each distributioncalendar year (using an applicable distri-bution period determined under A–4 of§ 1.401(a)(9)–5 for the employee in thedistribution calendar year either using theUniform Lifetime Table in A–2 of§ 1.401(a)(9)–9 or using the joint lifeexpectancy of the employee and a spousalalternate payee in the distribution calen-dar year if the spousal alternate payee ismore than 10 years younger than theemployee). The determination of whetherdistribution from such account after thedeath of the employee to the alternatepayee will be made in accordance withsection 401(a)(9)(B)(i) or section401(a)(9)(B)(ii) or (iii) and (iv) willdepend on whether distributions havebegun as determined under A–6 of§ 1.401(a)(9)–2 (which provides, in gen-eral, that distributions are not treated ashaving begun until the employee’srequired beginning date even though pay-ments may actually have begun beforethat date). For example, if the alternatepayee dies before the employee and dis-tribution of the separate account allocatedto the alternate payee pursuant to theQDRO is to be made to the alternate pay-ee’s beneficiary, such beneficiary may betreated as a designated beneficiary forpurposes of determining the minimumdistribution required from such accountafter the death of the employee if the ben-eficiary of the alternate payee is an indi-vidual and if such beneficiary is a benefi-ciary under the plan or specified to or inthe plan. Specification in or pursuant tothe QDRO is treated as specification tothe plan.

(2) Distribution of the separate accountallocated to an alternate payee pursuant toa QDRO will satisfy the requirements ofsection 401(a)(9)(A)(ii) if such account isto be distributed, beginning not later thanthe employee’s required beginning date,over the life of the alternate payee (orover a period not extending beyond thelife expectancy of the alternate payee).Also, if the plan permits the employee toelect whether distribution upon the deathof the employee will be made in accor-dance with the 5-year rule in section401(a)(9)(B)(ii) or the life expectancyrule in section 401(a)(9)(B)(iii) and (iv)

May 13, 2002 877 2002–19 I.R.B.

pursuant to A–4(c) of § 1.401(a)(9)–3,such election is to be made only by thealternate payee for purposes of distribut-ing the separate account allocated to thealternate payee pursuant to the QDRO. Ifthe alternate payee dies after distributionof the separate account allocated to thealternate payee pursuant to a QDRO hasbegun (determined under A–6 of§ 1.401(a)(9)–2) but before the employeedies, distribution of the remaining portionof that portion of the benefit allocated tothe alternate payee must be made inaccordance with the rules in§ 1.401(a)(9)–5 or 1.401(a)(9)–6T for dis-tributions during the life of the employee.Only after the death of the employee isthe amount of the required minimum dis-tribution determined in accordance withthe rules of section 401(a)(9)(B).

(c) If a QDRO does not provide that anemployee’s benefit is to be divided butprovides that a portion of an employee’sbenefit (otherwise payable to theemployee) is to be paid to an alternatepayee, such portion will not be treated asa separate account (or segregated share)of the employee. Instead, such portionwill be aggregated with any amount dis-tributed to the employee and will betreated as having been distributed to theemployee for purposes of determiningwhether section 401(a)(9) has been satis-fied with respect to that employee.

Q–7. Will a plan fail to satisfy section401(a)(9) merely because it fails to dis-tribute an amount otherwise required tobe distributed by section 401(a)(9) duringthe period in which the issue of whethera domestic relations order is a QDRO isbeing determined?

A–7. A plan will not fail to satisfy sec-tion 401(a)(9) merely because it fails todistribute an amount otherwise requiredto be distributed by section 401(a)(9) dur-ing the period in which the issue ofwhether a domestic relations order is aQDRO is being determined pursuant tosection 414(p)(7), provided that theperiod does not extend beyond the18-month period described in section414(p)(7)(E). To the extent that a distribu-tion otherwise required under section401(a)(9) is not made during this period,any segregated amounts, as defined insection 414(p)(7)(A), will be treated asthough the amounts are not vested during

the period and any distributions withrespect to such amounts must be madeunder the relevant rules for nonvestedbenefits described in either A–8 of§ 1.401(a)(9)–5 or A–6 of § 1.401(a)(9)–6T, as applicable.

Q–8. Will a plan fail to satisfy section401(a)(9) where an individual’s distribu-tion from the plan is less than the amountotherwise required to satisfy section401(a)(9) because distributions werebeing paid under an annuity contractissued by a life insurance company instate insurer delinquency proceedings andhave been reduced or suspended by rea-sons of such state proceedings?

A–8. A plan will not fail to satisfy sec-tion 401(a)(9) merely because an indi-vidual’s distribution from the plan is lessthan the amount otherwise required to sat-isfy section 401(a)(9) because distribu-tions were being paid under an annuitycontract issued by a life insurance com-pany in state insurer delinquency pro-ceedings and have been reduced or sus-pended by reasons of such stateproceedings. To the extent that a distribu-tion otherwise required under section401(a)(9) is not made during the stateinsurer delinquency proceedings, thisamount and any additional amountaccrued during this period will be treatedas though such amounts are not vestedduring the period and any distributionswith respect to such amounts must bemade under the relevant rules for non-vested benefits described in either A–8 of§ 1.401(a)(9)–5 or A–6 of § 1.401(a)(9)–6T, as applicable.

Q–9. Will a plan fail to qualify as apension plan within the meaning of sec-tion 401(a) solely because the plan per-mits distributions to commence to anemployee on or after April 1 of the calen-dar year following the calendar year inwhich the employee attains age 70½ eventhough the employee has not retired orattained the normal retirement age underthe plan as of the date on which such dis-tributions commence?

A–9. No, a plan will not fail to qualifyas a pension plan within the meaning ofsection 401(a) solely because the planpermits distributions to commence to anemployee on or after April 1 of the calen-dar year following the calendar year inwhich the employee attains age 70½ even

though the employee has not retired orattained the normal retirement age underthe plan as of the date on which such dis-tributions commence. This rule applieswithout regard to whether the employee isa 5-percent owner with respect to the planyear ending in the calendar year in whichdistributions commence.

Q–10. Is the distribution of an annuitycontract a distribution for purposes ofsection 401(a)(9)?

A–10. No, the distribution of an annu-ity contract is not a distribution for pur-poses of section 401(a)(9).

Q–11. Will a payment by a plan afterthe death of an employee fail to be treatedas a distribution for purposes of section401(a)(9) solely because it is made to anestate or a trust?

A–11. A payment by a plan after thedeath of an employee will not fail to betreated as a distribution for purposes ofsection 401(a)(9) solely because it ismade to an estate or a trust. As a result,the estate or trust which receives a pay-ment from a plan after the death of anemployee need not distribute the amountof such payment to the beneficiaries ofthe estate or trust in accordance with sec-tion 401(a)(9)(B). Pursuant to A–3 of§ 1.401(a)(9)–4, an estate may not be adesignated beneficiary. Thus, pursuant toA–4 of § 1.401(a)(9)–3, distribution tothe estate must satisfy the 5-year rule insection 401(a)(9)(B)(iii) if the distributionto the employee had not begun (asdefined in A–6 of § 1.401(a)(9)–2) as ofthe employee’s date of death. However,see A–5 and A–6 of § 1.401(a)(9)–4 forprovisions under which beneficiaries of atrust with respect to the trust’s interest inan employee’s benefit are treated as hav-ing been designated as beneficiaries ofthe employee under the plan.

Q–12. Will a plan fail to satisfy section411(d)(6) if the plan is amended to elimi-nate the availability of an optional formof benefit to the extent that the optionalform does not satisfy section 401(a)(9)?

A–12. No, pursuant to section411(d)(6)(B), a plan will not fail to satisfysection 411(d)(6) merely because the planis amended to eliminate the availability ofan optional form of benefit to the extentthat the optional form does not satisfysection 401(a)(9). (See also A–3 of§ 1.401(a)(9)–1, which requires a plan to

2002–19 I.R.B. 878 May 13, 2002

provide that, notwithstanding any otherplan provision, it will not distribute ben-efits under any option that does not sat-isfy section 401(a)(9).)

Q–13. Is a plan disqualified merelybecause it pays benefits under a designa-tion made before January 1, 1984, inaccordance with section 242(b)(2) of theTax Equity and Fiscal Responsibility Act(TEFRA)?

A–13. No, even though the distributionrequirements added by TEFRA were ret-roactively repealed by the Tax ReformAct of 1984 (TRA of 1984), the transi-tional election rule in section 242(b) ofTEFRA was preserved. Satisfaction of thespousal consent requirements of section4l7(a) and (e) (added by the RetirementEquity Act of 1984) will not be consid-ered a revocation of the pre-1984 desig-nation. However, sections 401(a)(11) and417 must be satisfied with respect to anydistribution subject to those sections. Theelection provided in section 242(b) ofTEFRA is hereafter referred to as a sec-tion 242(b)(2) election.

Q–14. If an amount is transferred fromone plan (transferor plan) to another plan(transferee plan), may the transferee plandistribute the amount transferred in accor-dance with a section 242(b)(2) electionmade under either the transferor plan orunder the transferee plan?

A–14. (a) If an amount is transferredfrom one plan (transferor plan) to anotherplan (transferee plan), the amount trans-ferred may be distributed in accordancewith a section 242(b)(2) election madeunder the transferor plan if the employeedid not elect to have the amount trans-ferred and if the amount transferred isseparately accounted for by the transfereeplan. However, only the benefit attribut-able to the amount transferred, plus earn-ings thereon, may be distributed in accor-dance with the section 242(b)(2) electionmade under the transferor plan. If theemployee elected to have the amount

transferred, the transfer will be treated asa distribution and rollover of the amounttransferred for purposes of this section.

(b) In the case in which an amount istransferred from one plan to another plan,the amount transferred may not be distrib-uted in accordance with a section242(b)(2) election made under the trans-feree plan. If a section 242(b)(2) electionwas made under the transferee plan, theamount transferred must be separatelyaccounted for. If the amount transferred isnot separately accounted for under thetransferee plan, the section 242(b)(2)election under the transferee plan isrevoked and section 401(a)(9) will applyto subsequent distributions by the trans-feree plan.

(c) A merger, spinoff, or consolidation,as defined in § 1.414(l)–1(b), will betreated as a transfer for purposes of thesection 242(b)(2) election.

Q–15. If an amount is distributed byone plan (distributing plan) and rolledover into another plan (receiving plan),may the receiving plan distribute theamount rolled over in accordance with asection 242(b)(2) election made undereither the distributing plan or the receiv-ing plan?

A–15. No, if an amount is distributedby one plan (distributing plan) and rolledover into another plan (receiving plan),the receiving plan must distribute theamount rolled over in accordance withsection 401(a)(9) whether or not theemployee made a section 242(b)(2) elec-tion under the distributing plan. Further,if the amount rolled over was not distrib-uted in accordance with the election, theelection under the distributing plan isrevoked and section 401(a)(9) will applyto all subsequent distributions by the dis-tributing plan. Finally, if the employeemade a section 242(b)(2) election underthe receiving plan and such election isstill in effect, the amount rolled over mustbe separately accounted for under the

receiving plan and distributed in accor-dance with section 401(a)(9). If amountsrolled over are not separately accountedfor, any section 242(b)(2) election underthe receiving plan is revoked and section401(a)(9) will apply to subsequent distri-butions by the receiving plan.

Q–16. May a section 242(b)(2) elec-tion be revoked after the date by whichdistributions are required to commence inorder to satisfy section 401(a)(9) and thissection of the regulations?

A–16. Yes, a section 242(b)(2) electionmay be revoked after the date by whichdistributions are required to commence inorder to satisfy section 401(a)(9) and thissection of the regulations. However, if thesection 242(b)(2) election is revoked afterthe date by which distributions arerequired to commence in order to satisfysection 401(a)(9) and this section of theregulations and the total amount of thedistributions which would have beenrequired to be made prior to the date ofthe revocation in order to satisfy section401(a)(9), but for the section 242(b)(2)election, have not been made, the planmust distribute by the end of the calendaryear following the calendar year in whichthe revocation occurs the total amount notyet distributed which was required tohave been distributed to satisfy therequirements of section 401(a)(9) andcontinue distributions in accordance withsuch requirements.

§ 1.401(a)(9)–9 Life expectancy and dis-tribution period tables.

Q–1. What is the life expectancy foran individual for purposes of determiningrequired minimum distributions undersection 401(a)(9)?

A–1 The following table, referred to asthe Single Life Table, is used for deter-mining the life expectancy of an indi-vidual:

May 13, 2002 879 2002–19 I.R.B.

Single Life Table

AgeLife

Expectancy AgeLife

Expectancy AgeLife

Expectancy AgeLife

Expectancy

0 82.4 29 54.3 58 27.0 87 6.71 81.6 30 53.3 59 26.1 88 6.32 80.6 31 52.4 60 25.2 89 5.93 79.7 32 51.4 61 24.4 90 5.54 78.7 33 50.4 62 23.5 91 5.25 77.7 34 49.4 63 22.7 92 4.96 76.7 35 48.5 64 21.8 93 4.67 75.8 36 47.5 65 21.0 94 4.38 74.8 37 46.5 66 20.2 95 4.19 73.8 38 45.6 67 19.4 96 3.810 72.8 39 44.6 68 18.6 97 3.611 71.8 40 43.6 69 17.8 98 3.412 70.8 41 42.7 70 17.0 99 3.113 69.9 42 41.7 71 16.3 100 2.914 68.9 43 40.7 72 15.5 101 2.715 67.9 44 39.8 73 14.8 102 2.516 66.9 45 38.8 74 14.1 103 2.317 66.0 46 37.9 75 13.4 104 2.118 65.0 47 37.0 76 12.7 105 1.919 64.0 48 36.0 77 12.1 106 1.720 63.0 49 35.1 78 11.4 107 1.521 62.1 50 34.2 79 10.8 108 1.422 61.1 51 33.3 80 10.2 109 1.223 60.1 52 32.3 81 9.7 110 1.124 59.1 53 31.4 82 9.1 111+ 1.025 58.2 54 30.5 83 8.626 57.2 55 29.6 84 8.127 56.2 56 28.7 85 7.628 55.3 57 27.9 86 7.1

Q–2. What is the applicable distribu-tion period for an individual account forpurposes of determining required mini-mum distributions during an employee’slifetime under section 401(a)(9)?

A–2. Table for determining distribu-tion period. The following table, referredto as the Uniform Lifetime Table, is usedfor determining the distribution period forlifetime distributions to an employee insituations in which the employee’s spouseis either not the sole designated benefi-ciary or is the sole designated beneficiarybut is not more than 10 years youngerthan the employee.

2002–19 I.R.B. 880 May 13, 2002

Uniform Lifetime TableAge of employee Distribution period Age of employee Distribution period

70 27.4 93 9.671 26.5 94 9.172 25.6 95 8.673 24.7 96 8.174 23.8 97 7.675 22.9 98 7.176 22.0 99 6.777 21.2 100 6.378 20.3 101 5.979 19.5 102 5.580 18.7 103 5.281 17.9 104 4.982 17.1 105 4.583 16.3 106 4.284 15.5 107 3.985 14.8 108 3.786 14.1 109 3.487 13.4 110 3.188 12.7 111 2.989 12.0 112 2.690 11.4 113 2.491 10.8 114 2.192 10.2 115+ 1.9

Q–3. What is the joint life and last sur-vivor expectancy of an individual andbeneficiary for purposes of determining

required minimum distributions undersection 401(a)(9)?

A–3. The following table, referred toas the Joint and Last Survivor Table, is

used for determining the joint and lastsurvivor life expectancy of two individu-als:

Joint and Last Survivor TableAGES 0 1 2 3 4 5 6 7 8 9

0 90.0 89.5 89.0 88.6 88.2 87.8 87.4 87.1 86.8 86.51 89.5 89.0 88.5 88.1 87.6 87.2 86.8 86.5 86.1 85.82 89.0 88.5 88.0 87.5 87.1 86.6 86.2 85.8 85.5 85.13 88.6 88.1 87.5 87.0 86.5 86.1 85.6 85.2 84.8 84.54 88.2 87.6 87.1 86.5 86.0 85.5 85.1 84.6 84.2 83.85 87.8 87.2 86.6 86.1 85.5 85.0 84.5 84.1 83.6 83.26 87.4 86.8 86.2 85.6 85.1 84.5 84.0 83.5 83.1 82.67 87.1 86.5 85.8 85.2 84.6 84.1 83.5 83.0 82.5 82.18 86.8 86.1 85.5 84.8 84.2 83.6 83.1 82.5 82.0 81.69 86.5 85.8 85.1 84.5 83.8 83.2 82.6 82.1 81.6 81.0

10 86.2 85.5 84.8 84.1 83.5 82.8 82.2 81.6 81.1 80.611 85.9 85.2 84.5 83.8 83.1 82.5 81.8 81.2 80.7 80.112 85.7 84.9 84.2 83.5 82.8 82.1 81.5 80.8 80.2 79.713 85.4 84.7 84.0 83.2 82.5 81.8 81.1 80.5 79.9 79.214 85.2 84.5 83.7 83.0 82.2 81.5 80.8 80.1 79.5 78.915 85.0 84.3 83.5 82.7 82.0 81.2 80.5 79.8 79.1 78.516 84.9 84.1 83.3 82.5 81.7 81.0 80.2 79.5 78.8 78.117 84.7 83.9 83.1 82.3 81.5 80.7 80.0 79.2 78.5 77.818 84.5 83.7 82.9 82.1 81.3 80.5 79.7 79.0 78.2 77.519 84.4 83.6 82.7 81.9 81.1 80.3 79.5 78.7 78.0 77.3

May 13, 2002 881 2002–19 I.R.B.

Joint and Last Survivor TableAGES 0 1 2 3 4 5 6 7 8 9

20 84.3 83.4 82.6 81.8 80.9 80.1 79.3 78.5 77.7 77.021 84.1 83.3 82.4 81.6 80.8 79.9 79.1 78.3 77.5 76.822 84.0 83.2 82.3 81.5 80.6 79.8 78.9 78.1 77.3 76.523 83.9 83.1 82.2 81.3 80.5 79.6 78.8 77.9 77.1 76.324 83.8 83.0 82.1 81.2 80.3 79.5 78.6 77.8 76.9 76.125 83.7 82.9 82.0 81.1 80.2 79.3 78.5 77.6 76.8 75.926 83.6 82.8 81.9 81.0 80.1 79.2 78.3 77.5 76.6 75.827 83.6 82.7 81.8 80.9 80.0 79.1 78.2 77.4 76.5 75.628 83.5 82.6 81.7 80.8 79.9 79.0 78.1 77.2 76.4 75.529 83.4 82.6 81.6 80.7 79.8 78.9 78.0 77.1 76.2 75.4

30 83.4 82.5 81.6 80.7 79.7 78.8 77.9 77.0 76.1 75.231 83.3 82.4 81.5 80.6 79.7 78.8 77.8 76.9 76.0 75.132 83.3 82.4 81.5 80.5 79.6 78.7 77.8 76.8 75.9 75.033 83.2 82.3 81.4 80.5 79.5 78.6 77.7 76.8 75.9 74.934 83.2 82.3 81.3 80.4 79.5 78.5 77.6 76.7 75.8 74.935 83.1 82.2 81.3 80.4 79.4 78.5 77.6 76.6 75.7 74.836 83.1 82.2 81.3 80.3 79.4 78.4 77.5 76.6 75.6 74.737 83.0 82.2 81.2 80.3 79.3 78.4 77.4 76.5 75.6 74.638 83.0 82.1 81.2 80.2 79.3 78.3 77.4 76.4 75.5 74.639 83.0 82.1 81.1 80.2 79.2 78.3 77.3 76.4 75.5 74.5

40 82.9 82.1 81.1 80.2 79.2 78.3 77.3 76.4 75.4 74.541 82.9 82.0 81.1 80.1 79.2 78.2 77.3 76.3 75.4 74.442 82.9 82.0 81.1 80.1 79.1 78.2 77.2 76.3 75.3 74.443 82.9 82.0 81.0 80.1 79.1 78.2 77.2 76.2 75.3 74.344 82.8 81.9 81.0 80.0 79.1 78.1 77.2 76.2 75.2 74.345 82.8 81.9 81.0 80.0 79.1 78.1 77.1 76.2 75.2 74.346 82.8 81.9 81.0 80.0 79.0 78.1 77.1 76.1 75.2 74.247 82.8 81.9 80.9 80.0 79.0 78.0 77.1 76.1 75.2 74.248 82.8 81.9 80.9 80.0 79.0 78.0 77.1 76.1 75.1 74.249 82.7 81.8 80.9 79.9 79.0 78.0 77.0 76.1 75.1 74.1

50 82.7 81.8 80.9 79.9 79.0 78.0 77.0 76.0 75.1 74.151 82.7 81.8 80.9 79.9 78.9 78.0 77.0 76.0 75.1 74.152 82.7 81.8 80.9 79.9 78.9 78.0 77.0 76.0 75.0 74.153 82.7 81.8 80.8 79.9 78.9 77.9 77.0 76.0 75.0 74.054 82.7 81.8 80.8 79.9 78.9 77.9 76.9 76.0 75.0 74.055 82.6 81.8 80.8 79.8 78.9 77.9 76.9 76.0 75.0 74.056 82.6 81.7 80.8 79.8 78.9 77.9 76.9 75.9 75.0 74.057 82.6 81.7 80.8 79.8 78.9 77.9 76.9 75.9 75.0 74.058 82.6 81.7 80.8 79.8 78.8 77.9 76.9 75.9 74.9 74.059 82.6 81.7 80.8 79.8 78.8 77.9 76.9 75.9 74.9 74.0

60 82.6 81.7 80.8 79.8 78.8 77.8 76.9 75.9 74.9 73.961 82.6 81.7 80.8 79.8 78.8 77.8 76.9 75.9 74.9 73.962 82.6 81.7 80.7 79.8 78.8 77.8 76.9 75.9 74.9 73.963 82.6 81.7 80.7 79.8 78.8 77.8 76.8 75.9 74.9 73.964 82.5 81.7 80.7 79.8 78.8 77.8 76.8 75.9 74.9 73.965 82.5 81.7 80.7 79.8 78.8 77.8 76.8 75.8 74.9 73.966 82.5 81.7 80.7 79.7 78.8 77.8 76.8 75.8 74.9 73.967 82.5 81.7 80.7 79.7 78.8 77.8 76.8 75.8 74.9 73.968 82.5 81.6 80.7 79.7 78.8 77.8 76.8 75.8 74.8 73.969 82.5 81.6 80.7 79.7 78.8 77.8 76.8 75.8 74.8 73.9

2002–19 I.R.B. 882 May 13, 2002

Joint and Last Survivor TableAGES 0 1 2 3 4 5 6 7 8 9

70 82.5 81.6 80.7 79.7 78.8 77.8 76.8 75.8 74.8 73.971 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.872 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.873 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.874 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.875 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.876 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.877 82.5 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.878 82.5 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.879 82.5 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8

80 82.5 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.881 82.4 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.882 82.4 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.883 82.4 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.884 82.4 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.885 82.4 81.6 80.6 79.7 78.7 77.7 76.8 75.8 74.8 73.886 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.887 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.888 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.889 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8

90 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.891 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.892 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.893 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.894 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.895 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.896 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.897 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.898 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.899 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8

100 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8101 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8102 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8103 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8104 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8105 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8106 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8107 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8108 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8109 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8

110 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8111 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8112 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8113 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8114 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8115+ 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8

AGES 10 11 12 13 14 15 16 17 18 19

10 80.0 79.6 79.1 78.7 78.2 77.9 77.5 77.2 76.8 76.511 79.6 79.0 78.6 78.1 77.7 77.3 76.9 76.5 76.2 75.8

May 13, 2002 883 2002–19 I.R.B.

Joint and Last Survivor TableAGES 10 11 12 13 14 15 16 17 18 19

12 79.1 78.6 78.1 77.6 77.1 76.7 76.3 75.9 75.5 75.213 78.7 78.1 77.6 77.1 76.6 76.1 75.7 75.3 74.9 74.514 78.2 77.7 77.1 76.6 76.1 75.6 75.1 74.7 74.3 73.915 77.9 77.3 76.7 76.1 75.6 75.1 74.6 74.1 73.7 73.316 77.5 76.9 76.3 75.7 75.1 74.6 74.1 73.6 73.1 72.717 77.2 76.5 75.9 75.3 74.7 74.1 73.6 73.1 72.6 72.118 76.8 76.2 75.5 74.9 74.3 73.7 73.1 72.6 72.1 71.619 76.5 75.8 75.2 74.5 73.9 73.3 72.7 72.1 71.6 71.1

20 76.3 75.5 74.8 74.2 73.5 72.9 72.3 71.7 71.1 70.621 76.0 75.3 74.5 73.8 73.2 72.5 71.9 71.3 70.7 70.122 75.8 75.0 74.3 73.5 72.9 72.2 71.5 70.9 70.3 69.723 75.5 74.8 74.0 73.3 72.6 71.9 71.2 70.5 69.9 69.324 75.3 74.5 73.8 73.0 72.3 71.6 70.9 70.2 69.5 68.925 75.1 74.3 73.5 72.8 72.0 71.3 70.6 69.9 69.2 68.526 75.0 74.1 73.3 72.5 71.8 71.0 70.3 69.6 68.9 68.227 74.8 74.0 73.1 72.3 71.6 70.8 70.0 69.3 68.6 67.928 74.6 73.8 73.0 72.2 71.3 70.6 69.8 69.0 68.3 67.629 74.5 73.6 72.8 72.0 71.2 70.4 69.6 68.8 68.0 67.3

30 74.4 73.5 72.7 71.8 71.0 70.2 69.4 68.6 67.8 67.131 74.3 73.4 72.5 71.7 70.8 70.0 69.2 68.4 67.6 66.832 74.1 73.3 72.4 71.5 70.7 69.8 69.0 68.2 67.4 66.633 74.0 73.2 72.3 71.4 70.5 69.7 68.8 68.0 67.2 66.434 73.9 73.0 72.2 71.3 70.4 69.5 68.7 67.8 67.0 66.235 73.9 73.0 72.1 71.2 70.3 69.4 68.5 67.7 66.8 66.036 73.8 72.9 72.0 71.1 70.2 69.3 68.4 67.6 66.7 65.937 73.7 72.8 71.9 71.0 70.1 69.2 68.3 67.4 66.6 65.738 73.6 72.7 71.8 70.9 70.0 69.1 68.2 67.3 66.4 65.639 73.6 72.7 71.7 70.8 69.9 69.0 68.1 67.2 66.3 65.4

40 73.5 72.6 71.7 70.7 69.8 68.9 68.0 67.1 66.2 65.341 73.5 72.5 71.6 70.7 69.7 68.8 67.9 67.0 66.1 65.242 73.4 72.5 71.5 70.6 69.7 68.8 67.8 66.9 66.0 65.143 73.4 72.4 71.5 70.6 69.6 68.7 67.8 66.8 65.9 65.044 73.3 72.4 71.4 70.5 69.6 68.6 67.7 66.8 65.9 64.945 73.3 72.3 71.4 70.5 69.5 68.6 67.6 66.7 65.8 64.946 73.3 72.3 71.4 70.4 69.5 68.5 67.6 66.6 65.7 64.847 73.2 72.3 71.3 70.4 69.4 68.5 67.5 66.6 65.7 64.748 73.2 72.2 71.3 70.3 69.4 68.4 67.5 66.5 65.6 64.749 73.2 72.2 71.2 70.3 69.3 68.4 67.4 66.5 65.6 64.6

50 73.1 72.2 71.2 70.3 69.3 68.4 67.4 66.5 65.5 64.651 73.1 72.2 71.2 70.2 69.3 68.3 67.4 66.4 65.5 64.552 73.1 72.1 71.2 70.2 69.2 68.3 67.3 66.4 65.4 64.553 73.1 72.1 71.1 70.2 69.2 68.3 67.3 66.3 65.4 64.454 73.1 72.1 71.1 70.2 69.2 68.2 67.3 66.3 65.4 64.455 73.0 72.1 71.1 70.1 69.2 68.2 67.2 66.3 65.3 64.456 73.0 72.1 71.1 70.1 69.1 68.2 67.2 66.3 65.3 64.357 73.0 72.0 71.1 70.1 69.1 68.2 67.2 66.2 65.3 64.358 73.0 72.0 71.0 70.1 69.1 68.1 67.2 66.2 65.2 64.359 73.0 72.0 71.0 70.1 69.1 68.1 67.2 66.2 65.2 64.3

2002–19 I.R.B. 884 May 13, 2002

Joint and Last Survivor TableAGES 10 11 12 13 14 15 16 17 18 19

60 73.0 72.0 71.0 70.0 69.1 68.1 67.1 66.2 65.2 64.261 73.0 72.0 71.0 70.0 69.1 68.1 67.1 66.2 65.2 64.262 72.9 72.0 71.0 70.0 69.0 68.1 67.1 66.1 65.2 64.263 72.9 72.0 71.0 70.0 69.0 68.1 67.1 66.1 65.2 64.264 72.9 71.9 71.0 70.0 69.0 68.0 67.1 66.1 65.1 64.265 72.9 71.9 71.0 70.0 69.0 68.0 67.1 66.1 65.1 64.266 72.9 71.9 70.9 70.0 69.0 68.0 67.1 66.1 65.1 64.167 72.9 71.9 70.9 70.0 69.0 68.0 67.0 66.1 65.1 64.168 72.9 71.9 70.9 70.0 69.0 68.0 67.0 66.1 65.1 64.169 72.9 71.9 70.9 69.9 69.0 68.0 67.0 66.1 65.1 64.1

70 72.9 71.9 70.9 69.9 69.0 68.0 67.0 66.0 65.1 64.171 72.9 71.9 70.9 69.9 69.0 68.0 67.0 66.0 65.1 64.172 72.9 71.9 70.9 69.9 69.0 68.0 67.0 66.0 65.1 64.173 72.9 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.174 72.9 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.175 72.8 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.176 72.8 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.177 72.8 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.178 72.8 71.9 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.079 72.8 71.9 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.0

80 72.8 71.9 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.081 72.8 71.8 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.082 72.8 71.8 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.083 72.8 71.8 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.084 72.8 71.8 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.085 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.086 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.087 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.088 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.089 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0

90 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.091 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.092 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.093 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.094 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.095 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.096 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.097 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.098 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.099 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0

100 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0101 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0102 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0103 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0104 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0105 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0106 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0107 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0108 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0109 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0

May 13, 2002 885 2002–19 I.R.B.

Joint and Last Survivor TableAGES 10 11 12 13 14 15 16 17 18 19

110 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0111 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0112 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0113 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0114 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0115+ 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0

AGES 20 21 22 23 24 25 26 27 28 29

20 70.1 69.6 69.1 68.7 68.3 67.9 67.5 67.2 66.9 66.621 69.6 69.1 68.6 68.2 67.7 67.3 66.9 66.6 66.2 65.922 69.1 68.6 68.1 67.6 67.2 66.7 66.3 65.9 65.6 65.223 68.7 68.2 67.6 67.1 66.6 66.2 65.7 65.3 64.9 64.624 68.3 67.7 67.2 66.6 66.1 65.6 65.2 64.7 64.3 63.925 67.9 67.3 66.7 66.2 65.6 65.1 64.6 64.2 63.7 63.326 67.5 66.9 66.3 65.7 65.2 64.6 64.1 63.6 63.2 62.827 67.2 66.6 65.9 65.3 64.7 64.2 63.6 63.1 62.7 62.228 66.9 66.2 65.6 64.9 64.3 63.7 63.2 62.7 62.1 61.729 66.6 65.9 65.2 64.6 63.9 63.3 62.8 62.2 61.7 61.2

30 66.3 65.6 64.9 64.2 63.6 62.9 62.3 61.8 61.2 60.731 66.1 65.3 64.6 63.9 63.2 62.6 62.0 61.4 60.8 60.232 65.8 65.1 64.3 63.6 62.9 62.2 61.6 61.0 60.4 59.833 65.6 64.8 64.1 63.3 62.6 61.9 61.3 60.6 60.0 59.434 65.4 64.6 63.8 63.1 62.3 61.6 60.9 60.3 59.6 59.035 65.2 64.4 63.6 62.8 62.1 61.4 60.6 59.9 59.3 58.636 65.0 64.2 63.4 62.6 61.9 61.1 60.4 59.6 59.0 58.337 64.9 64.0 63.2 62.4 61.6 60.9 60.1 59.4 58.7 58.038 64.7 63.9 63.0 62.2 61.4 60.6 59.9 59.1 58.4 57.739 64.6 63.7 62.9 62.1 61.2 60.4 59.6 58.9 58.1 57.4

40 64.4 63.6 62.7 61.9 61.1 60.2 59.4 58.7 57.9 57.141 64.3 63.5 62.6 61.7 60.9 60.1 59.3 58.5 57.7 56.942 64.2 63.3 62.5 61.6 60.8 59.9 59.1 58.3 57.5 56.743 64.1 63.2 62.4 61.5 60.6 59.8 58.9 58.1 57.3 56.544 64.0 63.1 62.2 61.4 60.5 59.6 58.8 57.9 57.1 56.345 64.0 63.0 62.2 61.3 60.4 59.5 58.6 57.8 56.9 56.146 63.9 63.0 62.1 61.2 60.3 59.4 58.5 57.7 56.8 56.047 63.8 62.9 62.0 61.1 60.2 59.3 58.4 57.5 56.7 55.848 63.7 62.8 61.9 61.0 60.1 59.2 58.3 57.4 56.5 55.749 63.7 62.8 61.8 60.9 60.0 59.1 58.2 57.3 56.4 55.6

50 63.6 62.7 61.8 60.8 59.9 59.0 58.1 57.2 56.3 55.451 63.6 62.6 61.7 60.8 59.9 58.9 58.0 57.1 56.2 55.352 63.5 62.6 61.7 60.7 59.8 58.9 58.0 57.1 56.1 55.253 63.5 62.5 61.6 60.7 59.7 58.8 57.9 57.0 56.1 55.254 63.5 62.5 61.6 60.6 59.7 58.8 57.8 56.9 56.0 55.155 63.4 62.5 61.5 60.6 59.6 58.7 57.8 56.8 55.9 55.056 63.4 62.4 61.5 60.5 59.6 58.7 57.7 56.8 55.9 54.957 63.4 62.4 61.5 60.5 59.6 58.6 57.7 56.7 55.8 54.958 63.3 62.4 61.4 60.5 59.5 58.6 57.6 56.7 55.8 54.859 63.3 62.3 61.4 60.4 59.5 58.5 57.6 56.7 55.7 54.8

60 63.3 62.3 61.4 60.4 59.5 58.5 57.6 56.6 55.7 54.761 63.3 62.3 61.3 60.4 59.4 58.5 57.5 56.6 55.6 54.7

2002–19 I.R.B. 886 May 13, 2002

Joint and Last Survivor TableAGES 20 21 22 23 24 25 26 27 28 29

62 63.2 62.3 61.3 60.4 59.4 58.4 57.5 56.5 55.6 54.763 63.2 62.3 61.3 60.3 59.4 58.4 57.5 56.5 55.6 54.664 63.2 62.2 61.3 60.3 59.4 58.4 57.4 56.5 55.5 54.665 63.2 62.2 61.3 60.3 59.3 58.4 57.4 56.5 55.5 54.666 63.2 62.2 61.2 60.3 59.3 58.4 57.4 56.4 55.5 54.567 63.2 62.2 61.2 60.3 59.3 58.3 57.4 56.4 55.5 54.568 63.1 62.2 61.2 60.2 59.3 58.3 57.4 56.4 55.4 54.569 63.1 62.2 61.2 60.2 59.3 58.3 57.3 56.4 55.4 54.5

70 63.1 62.2 61.2 60.2 59.3 58.3 57.3 56.4 55.4 54.471 63.1 62.1 61.2 60.2 59.2 58.3 57.3 56.4 55.4 54.472 63.1 62.1 61.2 60.2 59.2 58.3 57.3 56.3 55.4 54.473 63.1 62.1 61.2 60.2 59.2 58.3 57.3 56.3 55.4 54.474 63.1 62.1 61.2 60.2 59.2 58.2 57.3 56.3 55.4 54.475 63.1 62.1 61.1 60.2 59.2 58.2 57.3 56.3 55.3 54.476 63.1 62.1 61.1 60.2 59.2 58.2 57.3 56.3 55.3 54.477 63.1 62.1 61.1 60.2 59.2 58.2 57.3 56.3 55.3 54.478 63.1 62.1 61.1 60.2 59.2 58.2 57.3 56.3 55.3 54.479 63.1 62.1 61.1 60.2 59.2 58.2 57.2 56.3 55.3 54.3

80 63.1 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.381 63.1 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.382 63.1 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.383 63.1 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.384 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.385 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.386 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.2 55.3 54.387 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.2 55.3 54.388 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.2 55.3 54.389 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3

90 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.391 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.392 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.393 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.394 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.395 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.396 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.397 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.398 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.399 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3

100 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3101 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3102 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3103 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3104 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3105 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3106 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3107 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3108 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3109 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3

110 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3111 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3

May 13, 2002 887 2002–19 I.R.B.

Joint and Last Survivor TableAGES 20 21 22 23 24 25 26 27 28 29

112 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3113 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3114 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3115+ 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3

AGES 30 31 32 33 34 35 36 37 38 39

30 60.2 59.7 59.2 58.8 58.4 58.0 57.6 57.3 57.0 56.731 59.7 59.2 58.7 58.2 57.8 57.4 57.0 56.6 56.3 56.032 59.2 58.7 58.2 57.7 57.2 56.8 56.4 56.0 55.6 55.333 58.8 58.2 57.7 57.2 56.7 56.2 55.8 55.4 55.0 54.734 58.4 57.8 57.2 56.7 56.2 55.7 55.3 54.8 54.4 54.035 58.0 57.4 56.8 56.2 55.7 55.2 54.7 54.3 53.8 53.436 57.6 57.0 56.4 55.8 55.3 54.7 54.2 53.7 53.3 52.837 57.3 56.6 56.0 55.4 54.8 54.3 53.7 53.2 52.7 52.338 57.0 56.3 55.6 55.0 54.4 53.8 53.3 52.7 52.2 51.739 56.7 56.0 55.3 54.7 54.0 53.4 52.8 52.3 51.7 51.2

40 56.4 55.7 55.0 54.3 53.7 53.0 52.4 51.8 51.3 50.841 56.1 55.4 54.7 54.0 53.3 52.7 52.0 51.4 50.9 50.342 55.9 55.2 54.4 53.7 53.0 52.3 51.7 51.1 50.4 49.943 55.7 54.9 54.2 53.4 52.7 52.0 51.3 50.7 50.1 49.544 55.5 54.7 53.9 53.2 52.4 51.7 51.0 50.4 49.7 49.145 55.3 54.5 53.7 52.9 52.2 51.5 50.7 50.0 49.4 48.746 55.1 54.3 53.5 52.7 52.0 51.2 50.5 49.8 49.1 48.447 55.0 54.1 53.3 52.5 51.7 51.0 50.2 49.5 48.8 48.148 54.8 54.0 53.2 52.3 51.5 50.8 50.0 49.2 48.5 47.849 54.7 53.8 53.0 52.2 51.4 50.6 49.8 49.0 48.2 47.5

50 54.6 53.7 52.9 52.0 51.2 50.4 49.6 48.8 48.0 47.351 54.5 53.6 52.7 51.9 51.0 50.2 49.4 48.6 47.8 47.052 54.4 53.5 52.6 51.7 50.9 50.0 49.2 48.4 47.6 46.853 54.3 53.4 52.5 51.6 50.8 49.9 49.1 48.2 47.4 46.654 54.2 53.3 52.4 51.5 50.6 49.8 48.9 48.1 47.2 46.455 54.1 53.2 52.3 51.4 50.5 49.7 48.8 47.9 47.1 46.356 54.0 53.1 52.2 51.3 50.4 49.5 48.7 47.8 47.0 46.157 54.0 53.0 52.1 51.2 50.3 49.4 48.6 47.7 46.8 46.058 53.9 53.0 52.1 51.2 50.3 49.4 48.5 47.6 46.7 45.859 53.8 52.9 52.0 51.1 50.2 49.3 48.4 47.5 46.6 45.7

60 53.8 52.9 51.9 51.0 50.1 49.2 48.3 47.4 46.5 45.661 53.8 52.8 51.9 51.0 50.0 49.1 48.2 47.3 46.4 45.562 53.7 52.8 51.8 50.9 50.0 49.1 48.1 47.2 46.3 45.463 53.7 52.7 51.8 50.9 49.9 49.0 48.1 47.2 46.3 45.364 53.6 52.7 51.8 50.8 49.9 48.9 48.0 47.1 46.2 45.365 53.6 52.7 51.7 50.8 49.8 48.9 48.0 47.0 46.1 45.266 53.6 52.6 51.7 50.7 49.8 48.9 47.9 47.0 46.1 45.167 53.6 52.6 51.7 50.7 49.8 48.8 47.9 46.9 46.0 45.168 53.5 52.6 51.6 50.7 49.7 48.8 47.8 46.9 46.0 45.069 53.5 52.6 51.6 50.6 49.7 48.7 47.8 46.9 45.9 45.0

70 53.5 52.5 51.6 50.6 49.7 48.7 47.8 46.8 45.9 44.971 53.5 52.5 51.6 50.6 49.6 48.7 47.7 46.8 45.9 44.972 53.5 52.5 51.5 50.6 49.6 48.7 47.7 46.8 45.8 44.973 53.4 52.5 51.5 50.6 49.6 48.6 47.7 46.7 45.8 44.8

2002–19 I.R.B. 888 May 13, 2002

Joint and Last Survivor TableAGES 30 31 32 33 34 35 36 37 38 39

74 53.4 52.5 51.5 50.5 49.6 48.6 47.7 46.7 45.8 44.875 53.4 52.5 51.5 50.5 49.6 48.6 47.7 46.7 45.7 44.876 53.4 52.4 51.5 50.5 49.6 48.6 47.6 46.7 45.7 44.877 53.4 52.4 51.5 50.5 49.5 48.6 47.6 46.7 45.7 44.878 53.4 52.4 51.5 50.5 49.5 48.6 47.6 46.6 45.7 44.779 53.4 52.4 51.5 50.5 49.5 48.6 47.6 46.6 45.7 44.7

80 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.7 44.781 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.7 44.782 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.6 44.783 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.6 44.784 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.6 44.785 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.786 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.687 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.688 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.689 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6

90 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.691 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.692 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.693 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.694 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.695 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.696 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.697 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.698 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.699 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6

100 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6101 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6102 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6103 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6104 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6105 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6106 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6107 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6108 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6109 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6

110 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6111 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6112 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6113 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6114 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6115+ 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6

AGES 40 41 42 43 44 45 46 47 48 49

40 50.2 49.8 49.3 48.9 48.5 48.1 47.7 47.4 47.1 46.841 49.8 49.3 48.8 48.3 47.9 47.5 47.1 46.7 46.4 46.142 49.3 48.8 48.3 47.8 47.3 46.9 46.5 46.1 45.8 45.443 48.9 48.3 47.8 47.3 46.8 46.3 45.9 45.5 45.1 44.844 48.5 47.9 47.3 46.8 46.3 45.8 45.4 44.9 44.5 44.245 48.1 47.5 46.9 46.3 45.8 45.3 44.8 44.4 44.0 43.6

May 13, 2002 889 2002–19 I.R.B.

Joint and Last Survivor TableAGES 40 41 42 43 44 45 46 47 48 49

46 47.7 47.1 46.5 45.9 45.4 44.8 44.3 43.9 43.4 43.047 47.4 46.7 46.1 45.5 44.9 44.4 43.9 43.4 42.9 42.448 47.1 46.4 45.8 45.1 44.5 44.0 43.4 42.9 42.4 41.949 46.8 46.1 45.4 44.8 44.2 43.6 43.0 42.4 41.9 41.4

50 46.5 45.8 45.1 44.4 43.8 43.2 42.6 42.0 41.5 40.951 46.3 45.5 44.8 44.1 43.5 42.8 42.2 41.6 41.0 40.552 46.0 45.3 44.6 43.8 43.2 42.5 41.8 41.2 40.6 40.153 45.8 45.1 44.3 43.6 42.9 42.2 41.5 40.9 40.3 39.754 45.6 44.8 44.1 43.3 42.6 41.9 41.2 40.5 39.9 39.355 45.5 44.7 43.9 43.1 42.4 41.6 40.9 40.2 39.6 38.956 45.3 44.5 43.7 42.9 42.1 41.4 40.7 40.0 39.3 38.657 45.1 44.3 43.5 42.7 41.9 41.2 40.4 39.7 39.0 38.358 45.0 44.2 43.3 42.5 41.7 40.9 40.2 39.4 38.7 38.059 44.9 44.0 43.2 42.4 41.5 40.7 40.0 39.2 38.5 37.8

60 44.7 43.9 43.0 42.2 41.4 40.6 39.8 39.0 38.2 37.561 44.6 43.8 42.9 42.1 41.2 40.4 39.6 38.8 38.0 37.362 44.5 43.7 42.8 41.9 41.1 40.3 39.4 38.6 37.8 37.163 44.5 43.6 42.7 41.8 41.0 40.1 39.3 38.5 37.7 36.964 44.4 43.5 42.6 41.7 40.8 40.0 39.2 38.3 37.5 36.765 44.3 43.4 42.5 41.6 40.7 39.9 39.0 38.2 37.4 36.666 44.2 43.3 42.4 41.5 40.6 39.8 38.9 38.1 37.2 36.467 44.2 43.3 42.3 41.4 40.6 39.7 38.8 38.0 37.1 36.368 44.1 43.2 42.3 41.4 40.5 39.6 38.7 37.9 37.0 36.269 44.1 43.1 42.2 41.3 40.4 39.5 38.6 37.8 36.9 36.0

70 44.0 43.1 42.2 41.3 40.3 39.4 38.6 37.7 36.8 35.971 44.0 43.0 42.1 41.2 40.3 39.4 38.5 37.6 36.7 35.972 43.9 43.0 42.1 41.1 40.2 39.3 38.4 37.5 36.6 35.873 43.9 43.0 42.0 41.1 40.2 39.3 38.4 37.5 36.6 35.774 43.9 42.9 42.0 41.1 40.1 39.2 38.3 37.4 36.5 35.675 43.8 42.9 42.0 41.0 40.1 39.2 38.3 37.4 36.5 35.676 43.8 42.9 41.9 41.0 40.1 39.1 38.2 37.3 36.4 35.577 43.8 42.9 41.9 41.0 40.0 39.1 38.2 37.3 36.4 35.578 43.8 42.8 41.9 40.9 40.0 39.1 38.2 37.2 36.3 35.479 43.8 42.8 41.9 40.9 40.0 39.1 38.1 37.2 36.3 35.4

80 43.7 42.8 41.8 40.9 40.0 39.0 38.1 37.2 36.3 35.481 43.7 42.8 41.8 40.9 39.9 39.0 38.1 37.2 36.2 35.382 43.7 42.8 41.8 40.9 39.9 39.0 38.1 37.1 36.2 35.383 43.7 42.8 41.8 40.9 39.9 39.0 38.0 37.1 36.2 35.384 43.7 42.7 41.8 40.8 39.9 39.0 38.0 37.1 36.2 35.385 43.7 42.7 41.8 40.8 39.9 38.9 38.0 37.1 36.2 35.286 43.7 42.7 41.8 40.8 39.9 38.9 38.0 37.1 36.1 35.287 43.7 42.7 41.8 40.8 39.9 38.9 38.0 37.0 36.1 35.288 43.7 42.7 41.8 40.8 39.9 38.9 38.0 37.0 36.1 35.289 43.7 42.7 41.7 40.8 39.8 38.9 38.0 37.0 36.1 35.2

90 43.7 42.7 41.7 40.8 39.8 38.9 38.0 37.0 36.1 35.291 43.7 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.292 43.7 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.193 43.7 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.194 43.7 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.195 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.1

2002–19 I.R.B. 890 May 13, 2002

Joint and Last Survivor TableAGES 40 41 42 43 44 45 46 47 48 49

96 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.197 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.198 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.199 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1

100 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1101 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1102 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1103 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1104 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1105 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1106 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1107 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1108 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1109 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1

110 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1111 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1112 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1113 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1114 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1115+ 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1

AGES 50 51 52 53 54 55 56 57 58 59

50 40.4 40.0 39.5 39.1 38.7 38.3 38.0 37.6 37.3 37.151 40.0 39.5 39.0 38.5 38.1 37.7 37.4 37.0 36.7 36.452 39.5 39.0 38.5 38.0 37.6 37.2 36.8 36.4 36.0 35.753 39.1 38.5 38.0 37.5 37.1 36.6 36.2 35.8 35.4 35.154 38.7 38.1 37.6 37.1 36.6 36.1 35.7 35.2 34.8 34.555 38.3 37.7 37.2 36.6 36.1 35.6 35.1 34.7 34.3 33.956 38.0 37.4 36.8 36.2 35.7 35.1 34.7 34.2 33.7 33.357 37.6 37.0 36.4 35.8 35.2 34.7 34.2 33.7 33.2 32.858 37.3 36.7 36.0 35.4 34.8 34.3 33.7 33.2 32.8 32.359 37.1 36.4 35.7 35.1 34.5 33.9 33.3 32.8 32.3 31.8

60 36.8 36.1 35.4 34.8 34.1 33.5 32.9 32.4 31.9 31.361 36.6 35.8 35.1 34.5 33.8 33.2 32.6 32.0 31.4 30.962 36.3 35.6 34.9 34.2 33.5 32.9 32.2 31.6 31.1 30.563 36.1 35.4 34.6 33.9 33.2 32.6 31.9 31.3 30.7 30.164 35.9 35.2 34.4 33.7 33.0 32.3 31.6 31.0 30.4 29.865 35.8 35.0 34.2 33.5 32.7 32.0 31.4 30.7 30.0 29.466 35.6 34.8 34.0 33.3 32.5 31.8 31.1 30.4 29.8 29.167 35.5 34.7 33.9 33.1 32.3 31.6 30.9 30.2 29.5 28.868 35.3 34.5 33.7 32.9 32.1 31.4 30.7 29.9 29.2 28.669 35.2 34.4 33.6 32.8 32.0 31.2 30.5 29.7 29.0 28.3

70 35.1 34.3 33.4 32.6 31.8 31.1 30.3 29.5 28.8 28.171 35.0 34.2 33.3 32.5 31.7 30.9 30.1 29.4 28.6 27.972 34.9 34.1 33.2 32.4 31.6 30.8 30.0 29.2 28.4 27.773 34.8 34.0 33.1 32.3 31.5 30.6 29.8 29.1 28.3 27.574 34.8 33.9 33.0 32.2 31.4 30.5 29.7 28.9 28.1 27.475 34.7 33.8 33.0 32.1 31.3 30.4 29.6 28.8 28.0 27.276 34.6 33.8 32.9 32.0 31.2 30.3 29.5 28.7 27.9 27.177 34.6 33.7 32.8 32.0 31.1 30.3 29.4 28.6 27.8 27.0

May 13, 2002 891 2002–19 I.R.B.

Joint and Last Survivor TableAGES 50 51 52 53 54 55 56 57 58 59

78 34.5 33.6 32.8 31.9 31.0 30.2 29.3 28.5 27.7 26.979 34.5 33.6 32.7 31.8 31.0 30.1 29.3 28.4 27.6 26.8

80 34.5 33.6 32.7 31.8 30.9 30.1 29.2 28.4 27.5 26.781 34.4 33.5 32.6 31.8 30.9 30.0 29.2 28.3 27.5 26.682 34.4 33.5 32.6 31.7 30.8 30.0 29.1 28.3 27.4 26.683 34.4 33.5 32.6 31.7 30.8 29.9 29.1 28.2 27.4 26.584 34.3 33.4 32.5 31.7 30.8 29.9 29.0 28.2 27.3 26.585 34.3 33.4 32.5 31.6 30.7 29.9 29.0 28.1 27.3 26.486 34.3 33.4 32.5 31.6 30.7 29.8 29.0 28.1 27.2 26.487 34.3 33.4 32.5 31.6 30.7 29.8 28.9 28.1 27.2 26.488 34.3 33.4 32.5 31.6 30.7 29.8 28.9 28.0 27.2 26.389 34.3 33.3 32.4 31.5 30.7 29.8 28.9 28.0 27.2 26.3

90 34.2 33.3 32.4 31.5 30.6 29.8 28.9 28.0 27.1 26.391 34.2 33.3 32.4 31.5 30.6 29.7 28.9 28.0 27.1 26.392 34.2 33.3 32.4 31.5 30.6 29.7 28.8 28.0 27.1 26.293 34.2 33.3 32.4 31.5 30.6 29.7 28.8 28.0 27.1 26.294 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.1 26.295 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.1 26.296 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.297 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.298 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.299 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.2

100 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.1101 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.1102 34.2 33.3 32.4 31.4 30.5 29.7 28.8 27.9 27.0 26.1103 34.2 33.3 32.4 31.4 30.5 29.7 28.8 27.9 27.0 26.1104 34.2 33.3 32.4 31.4 30.5 29.6 28.8 27.9 27.0 26.1105 34.2 33.3 32.3 31.4 30.5 29.6 28.8 27.9 27.0 26.1106 34.2 33.3 32.3 31.4 30.5 29.6 28.8 27.9 27.0 26.1107 34.2 33.3 32.3 31.4 30.5 29.6 28.8 27.9 27.0 26.1108 34.2 33.3 32.3 31.4 30.5 29.6 28.8 27.9 27.0 26.1109 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1

110 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1111 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1112 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1113 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1114 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1115+ 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1

AGES 60 61 62 63 64 65 66 67 68 69

60 30.9 30.4 30.0 29.6 29.2 28.8 28.5 28.2 27.9 27.661 30.4 29.9 29.5 29.0 28.6 28.3 27.9 27.6 27.3 27.062 30.0 29.5 29.0 28.5 28.1 27.7 27.3 27.0 26.7 26.463 29.6 29.0 28.5 28.1 27.6 27.2 26.8 26.4 26.1 25.764 29.2 28.6 28.1 27.6 27.1 26.7 26.3 25.9 25.5 25.2

2002–19 I.R.B. 892 May 13, 2002

Joint and Last Survivor TableAGES 60 61 62 63 64 65 66 67 68 69

65 28.8 28.3 27.7 27.2 26.7 26.2 25.8 25.4 25.0 24.666 28.5 27.9 27.3 26.8 26.3 25.8 25.3 24.9 24.5 24.167 28.2 27.6 27.0 26.4 25.9 25.4 24.9 24.4 24.0 23.668 27.9 27.3 26.7 26.1 25.5 25.0 24.5 24.0 23.5 23.169 27.6 27.0 26.4 25.7 25.2 24.6 24.1 23.6 23.1 22.6

70 27.4 26.7 26.1 25.4 24.8 24.3 23.7 23.2 22.7 22.271 27.2 26.5 25.8 25.2 24.5 23.9 23.4 22.8 22.3 21.872 27.0 26.3 25.6 24.9 24.3 23.7 23.1 22.5 22.0 21.473 26.8 26.1 25.4 24.7 24.0 23.4 22.8 22.2 21.6 21.174 26.6 25.9 25.2 24.5 23.8 23.1 22.5 21.9 21.3 20.875 26.5 25.7 25.0 24.3 23.6 22.9 22.3 21.6 21.0 20.576 26.3 25.6 24.8 24.1 23.4 22.7 22.0 21.4 20.8 20.277 26.2 25.4 24.7 23.9 23.2 22.5 21.8 21.2 20.6 19.978 26.1 25.3 24.6 23.8 23.1 22.4 21.7 21.0 20.3 19.779 26.0 25.2 24.4 23.7 22.9 22.2 21.5 20.8 20.1 19.5

80 25.9 25.1 24.3 23.6 22.8 22.1 21.3 20.6 20.0 19.381 25.8 25.0 24.2 23.4 22.7 21.9 21.2 20.5 19.8 19.182 25.8 24.9 24.1 23.4 22.6 21.8 21.1 20.4 19.7 19.083 25.7 24.9 24.1 23.3 22.5 21.7 21.0 20.2 19.5 18.884 25.6 24.8 24.0 23.2 22.4 21.6 20.9 20.1 19.4 18.785 25.6 24.8 23.9 23.1 22.3 21.6 20.8 20.1 19.3 18.686 25.5 24.7 23.9 23.1 22.3 21.5 20.7 20.0 19.2 18.587 25.5 24.7 23.8 23.0 22.2 21.4 20.7 19.9 19.2 18.488 25.5 24.6 23.8 23.0 22.2 21.4 20.6 19.8 19.1 18.389 25.4 24.6 23.8 22.9 22.1 21.3 20.5 19.8 19.0 18.3

90 25.4 24.6 23.7 22.9 22.1 21.3 20.5 19.7 19.0 18.291 25.4 24.5 23.7 22.9 22.1 21.3 20.5 19.7 18.9 18.292 25.4 24.5 23.7 22.9 22.0 21.2 20.4 19.6 18.9 18.193 25.4 24.5 23.7 22.8 22.0 21.2 20.4 19.6 18.8 18.194 25.3 24.5 23.6 22.8 22.0 21.2 20.4 19.6 18.8 18.095 25.3 24.5 23.6 22.8 22.0 21.1 20.3 19.6 18.8 18.096 25.3 24.5 23.6 22.8 21.9 21.1 20.3 19.5 18.8 18.097 25.3 24.5 23.6 22.8 21.9 21.1 20.3 19.5 18.7 18.098 25.3 24.4 23.6 22.8 21.9 21.1 20.3 19.5 18.7 17.999 25.3 24.4 23.6 22.7 21.9 21.1 20.3 19.5 18.7 17.9

100 25.3 24.4 23.6 22.7 21.9 21.1 20.3 19.5 18.7 17.9101 25.3 24.4 23.6 22.7 21.9 21.1 20.2 19.4 18.7 17.9102 25.3 24.4 23.6 22.7 21.9 21.1 20.2 19.4 18.6 17.9103 25.3 24.4 23.6 22.7 21.9 21.0 20.2 19.4 18.6 17.9104 25.3 24.4 23.5 22.7 21.9 21.0 20.2 19.4 18.6 17.8105 25.3 24.4 23.5 22.7 21.9 21.0 20.2 19.4 18.6 17.8106 25.3 24.4 23.5 22.7 21.9 21.0 20.2 19.4 18.6 17.8107 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8108 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8109 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8

May 13, 2002 893 2002–19 I.R.B.

Joint and Last Survivor TableAGES 60 61 62 63 64 65 66 67 68 69

110 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8111 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8112 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8113 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8114 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8115+ 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8

AGES 70 71 72 73 74 75 76 77 78 79

70 21.8 21.3 20.9 20.6 20.2 19.9 19.6 19.4 19.1 18.971 21.3 20.9 20.5 20.1 19.7 19.4 19.1 18.8 18.5 18.372 20.9 20.5 20.0 19.6 19.3 18.9 18.6 18.3 18.0 17.773 20.6 20.1 19.6 19.2 18.8 18.4 18.1 17.8 17.5 17.274 20.2 19.7 19.3 18.8 18.4 18.0 17.6 17.3 17.0 16.775 19.9 19.4 18.9 18.4 18.0 17.6 17.2 16.8 16.5 16.276 19.6 19.1 18.6 18.1 17.6 17.2 16.8 16.4 16.0 15.777 19.4 18.8 18.3 17.8 17.3 16.8 16.4 16.0 15.6 15.378 19.1 18.5 18.0 17.5 17.0 16.5 16.0 15.6 15.2 14.979 18.9 18.3 17.7 17.2 16.7 16.2 15.7 15.3 14.9 14.5

80 18.7 18.1 17.5 16.9 16.4 15.9 15.4 15.0 14.5 14.181 18.5 17.9 17.3 16.7 16.2 15.6 15.1 14.7 14.2 13.882 18.3 17.7 17.1 16.5 15.9 15.4 14.9 14.4 13.9 13.583 18.2 17.5 16.9 16.3 15.7 15.2 14.7 14.2 13.7 13.284 18.0 17.4 16.7 16.1 15.5 15.0 14.4 13.9 13.4 13.085 17.9 17.3 16.6 16.0 15.4 14.8 14.3 13.7 13.2 12.886 17.8 17.1 16.5 15.8 15.2 14.6 14.1 13.5 13.0 12.587 17.7 17.0 16.4 15.7 15.1 14.5 13.9 13.4 12.9 12.488 17.6 16.9 16.3 15.6 15.0 14.4 13.8 13.2 12.7 12.289 17.6 16.9 16.2 15.5 14.9 14.3 13.7 13.1 12.6 12.0

90 17.5 16.8 16.1 15.4 14.8 14.2 13.6 13.0 12.4 11.991 17.4 16.7 16.0 15.4 14.7 14.1 13.5 12.9 12.3 11.892 17.4 16.7 16.0 15.3 14.6 14.0 13.4 12.8 12.2 11.793 17.3 16.6 15.9 15.2 14.6 13.9 13.3 12.7 12.1 11.694 17.3 16.6 15.9 15.2 14.5 13.9 13.2 12.6 12.0 11.595 17.3 16.5 15.8 15.1 14.5 13.8 13.2 12.6 12.0 11.496 17.2 16.5 15.8 15.1 14.4 13.8 13.1 12.5 11.9 11.397 17.2 16.5 15.8 15.1 14.4 13.7 13.1 12.5 11.9 11.398 17.2 16.4 15.7 15.0 14.3 13.7 13.0 12.4 11.8 11.299 17.2 16.4 15.7 15.0 14.3 13.6 13.0 12.4 11.8 11.2

100 17.1 16.4 15.7 15.0 14.3 13.6 12.9 12.3 11.7 11.1101 17.1 16.4 15.6 14.9 14.2 13.6 12.9 12.3 11.7 11.1102 17.1 16.4 15.6 14.9 14.2 13.5 12.9 12.2 11.6 11.0103 17.1 16.3 15.6 14.9 14.2 13.5 12.9 12.2 11.6 11.0104 17.1 16.3 15.6 14.9 14.2 13.5 12.8 12.2 11.6 11.0105 17.1 16.3 15.6 14.9 14.2 13.5 12.8 12.2 11.5 10.9106 17.1 16.3 15.6 14.8 14.1 13.5 12.8 12.2 11.5 10.9

2002–19 I.R.B. 894 May 13, 2002

Joint and Last Survivor TableAGES 70 71 72 73 74 75 76 77 78 79

107 17.0 16.3 15.6 14.8 14.1 13.4 12.8 12.1 11.5 10.9108 17.0 16.3 15.5 14.8 14.1 13.4 12.8 12.1 11.5 10.9109 17.0 16.3 15.5 14.8 14.1 13.4 12.8 12.1 11.5 10.9

110 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.5 10.9111 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.5 10.8112 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.5 10.8113 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.4 10.8114 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.4 10.8115+ 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.4 10.8

AGES 80 81 82 83 84 85 86 87 88 89

80 13.8 13.4 13.1 12.8 12.6 12.3 12.1 11.9 11.7 11.581 13.4 13.1 12.7 12.4 12.2 11.9 11.7 11.4 11.3 11.182 13.1 12.7 12.4 12.1 11.8 11.5 11.3 11.0 10.8 10.683 12.8 12.4 12.1 11.7 11.4 11.1 10.9 10.6 10.4 10.284 12.6 12.2 11.8 11.4 11.1 10.8 10.5 10.3 10.1 9.985 12.3 11.9 11.5 11.1 10.8 10.5 10.2 9.9 9.7 9.586 12.1 11.7 11.3 10.9 10.5 10.2 9.9 9.6 9.4 9.287 11.9 11.4 11.0 10.6 10.3 9.9 9.6 9.4 9.1 8.988 11.7 11.3 10.8 10.4 10.1 9.7 9.4 9.1 8.8 8.689 11.5 11.1 10.6 10.2 9.9 9.5 9.2 8.9 8.6 8.3

90 11.4 10.9 10.5 10.1 9.7 9.3 9.0 8.6 8.3 8.191 11.3 10.8 10.3 9.9 9.5 9.1 8.8 8.4 8.1 7.992 11.2 10.7 10.2 9.8 9.3 9.0 8.6 8.3 8.0 7.793 11.1 10.6 10.1 9.6 9.2 8.8 8.5 8.1 7.8 7.594 11.0 10.5 10.0 9.5 9.1 8.7 8.3 8.0 7.6 7.395 10.9 10.4 9.9 9.4 9.0 8.6 8.2 7.8 7.5 7.296 10.8 10.3 9.8 9.3 8.9 8.5 8.1 7.7 7.4 7.197 10.7 10.2 9.7 9.2 8.8 8.4 8.0 7.6 7.3 6.998 10.7 10.1 9.6 9.2 8.7 8.3 7.9 7.5 7.1 6.899 10.6 10.1 9.6 9.1 8.6 8.2 7.8 7.4 7.0 6.7

100 10.6 10.0 9.5 9.0 8.5 8.1 7.7 7.3 6.9 6.6101 10.5 10.0 9.4 9.0 8.5 8.0 7.6 7.2 6.9 6.5102 10.5 9.9 9.4 8.9 8.4 8.0 7.5 7.1 6.8 6.4103 10.4 9.9 9.4 8.8 8.4 7.9 7.5 7.1 6.7 6.3104 10.4 9.8 9.3 8.8 8.3 7.9 7.4 7.0 6.6 6.3105 10.4 9.8 9.3 8.8 8.3 7.8 7.4 7.0 6.6 6.2106 10.3 9.8 9.2 8.7 8.2 7.8 7.3 6.9 6.5 6.2107 10.3 9.8 9.2 8.7 8.2 7.7 7.3 6.9 6.5 6.1108 10.3 9.7 9.2 8.7 8.2 7.7 7.3 6.8 6.4 6.1109 10.3 9.7 9.2 8.7 8.2 7.7 7.2 6.8 6.4 6.0

110 10.3 9.7 9.2 8.6 8.1 7.7 7.2 6.8 6.4 6.0111 10.3 9.7 9.1 8.6 8.1 7.6 7.2 6.8 6.3 6.0112 10.2 9.7 9.1 8.6 8.1 7.6 7.2 6.7 6.3 5.9113 10.2 9.7 9.1 8.6 8.1 7.6 7.2 6.7 6.3 5.9

May 13, 2002 895 2002–19 I.R.B.

Joint and Last Survivor TableAGES 80 81 82 83 84 85 86 87 88 89

114 10.2 9.7 9.1 8.6 8.1 7.6 7.1 6.7 6.3 5.9115+ 10.2 9.7 9.1 8.6 8.1 7.6 7.1 6.7 6.3 5.9

AGES 90 91 92 93 94 95 96 97 98 99

90 7.8 7.6 7.4 7.2 7.1 6.9 6.8 6.6 6.5 6.491 7.6 7.4 7.2 7.0 6.8 6.7 6.5 6.4 6.3 6.192 7.4 7.2 7.0 6.8 6.6 6.4 6.3 6.1 6.0 5.993 7.2 7.0 6.8 6.6 6.4 6.2 6.1 5.9 5.8 5.694 7.1 6.8 6.6 6.4 6.2 6.0 5.9 5.7 5.6 5.495 6.9 6.7 6.4 6.2 6.0 5.8 5.7 5.5 5.4 5.296 6.8 6.5 6.3 6.1 5.9 5.7 5.5 5.3 5.2 5.097 6.6 6.4 6.1 5.9 5.7 5.5 5.3 5.2 5.0 4.998 6.5 6.3 6.0 5.8 5.6 5.4 5.2 5.0 4.8 4.799 6.4 6.1 5.9 5.6 5.4 5.2 5.0 4.9 4.7 4.5

100 6.3 6.0 5.8 5.5 5.3 5.1 4.9 4.7 4.5 4.4101 6.2 5.9 5.6 5.4 5.2 5.0 4.8 4.6 4.4 4.2102 6.1 5.8 5.5 5.3 5.1 4.8 4.6 4.4 4.3 4.1103 6.0 5.7 5.4 5.2 5.0 4.7 4.5 4.3 4.1 4.0104 5.9 5.6 5.4 5.1 4.9 4.6 4.4 4.2 4.0 3.8105 5.9 5.6 5.3 5.0 4.8 4.5 4.3 4.1 3.9 3.7106 5.8 5.5 5.2 4.9 4.7 4.5 4.2 4.0 3.8 3.6107 5.8 5.4 5.1 4.9 4.6 4.4 4.2 3.9 3.7 3.5108 5.7 5.4 5.1 4.8 4.6 4.3 4.1 3.9 3.7 3.5109 5.7 5.3 5.0 4.8 4.5 4.3 4.0 3.8 3.6 3.4

110 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.8 3.5 3.3111 5.6 5.3 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.3112 5.6 5.3 4.9 4.7 4.4 4.1 3.9 3.7 3.5 3.2113 5.6 5.2 4.9 4.6 4.4 4.1 3.9 3.6 3.4 3.2114 5.6 5.2 4.9 4.6 4.3 4.1 3.9 3.6 3.4 3.2115+ 5.5 5.2 4.9 4.6 4.3 4.1 3.8 3.6 3.4 3.1

AGES 100 101 102 103 104 105 106 107 108 109

100 4.2 4.1 3.9 3.8 3.7 3.5 3.4 3.3 3.3 3.2101 4.1 3.9 3.7 3.6 3.5 3.4 3.2 3.1 3.1 3.0102 3.9 3.7 3.6 3.4 3.3 3.2 3.1 3.0 2.9 2.8103 3.8 3.6 3.4 3.3 3.2 3.0 2.9 2.8 2.7 2.6104 3.7 3.5 3.3 3.2 3.0 2.9 2.7 2.6 2.5 2.4105 3.5 3.4 3.2 3.0 2.9 2.7 2.6 2.5 2.4 2.3106 3.4 3.2 3.1 2.9 2.7 2.6 2.4 2.3 2.2 2.1107 3.3 3.1 3.0 2.8 2.6 2.5 2.3 2.2 2.1 2.0108 3.3 3.1 2.9 2.7 2.5 2.4 2.2 2.1 1.9 1.8109 3.2 3.0 2.8 2.6 2.4 2.3 2.1 2.0 1.8 1.7

110 3.1 2.9 2.7 2.5 2.3 2.2 2.0 1.9 1.7 1.6111 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.8 1.6 1.5112 3.0 2.8 2.6 2.4 2.2 2.0 1.9 1.7 1.5 1.4113 3.0 2.8 2.6 2.4 2.2 2.0 1.8 1.6 1.5 1.3

2002–19 I.R.B. 896 May 13, 2002

Joint and Last Survivor TableAGES 100 101 102 103 104 105 106 107 108 109

114 3.0 2.7 2.5 2.3 2.1 1.9 1.8 1.6 1.4 1.3115+ 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.4 1.2

AGES 110 111 112 113 114 115+

110 1.5 1.4 1.3 1.2 1.1 1.1111 1.4 1.2 1.1 1.1 1.0 1.0112 1.3 1.1 1.0 1.0 1.0 1.0113 1.2 1.1 1.0 1.0 1.0 1.0114 1.1 1.0 1.0 1.0 1.0 1.0115+ 1.1 1.0 1.0 1.0 1.0 1.0

Q–4. May the tables under this sectionbe changed?

A–4. The Single Life Table, UniformLifetime Table and Joint and Last Survi-vor Table provided in A–1 through A–3of this section may be changed by theCommissioner in revenue rulings, notices,and other guidance published in the Inter-nal Revenue Bulletin. See § 601.601(d)(2)(ii)(b) of this chapter.

Par. 3. Section 1.403(b)–3 is added toread as follows:

§ 1.403(b)–3 Required minimum distribu-tions from annuity contracts purchased,or custodial accounts or retirementincome accounts established, by a section501(c)(3) organization or a public school.

Q–1. Are section 403(b) contracts sub-ject to the distribution rules provided insection 401(a)(9)?

A–1. (a) Yes, section 403(b) contractsare subject to the distribution rules pro-vided in section 401(a)(9). For purposesof this section, the term section 403(b)contract means an annuity contractdescribed in section 403(b)(1), custodialaccount described in section 403(b)(7), orretirement income account described insection 403(b)(9).

(b) For purposes of applying the distri-bution rules in section 401(a)(9), section403(b) contracts will be treated as indi-vidual retirement annuities described insection 408(b) and individual retirementaccounts described in section 408(a)(IRAs). Consequently, except as other-wise provided in paragraph (c) of thisA–1, the distribution rules in section401(a)(9) will be applied to section403(b) contracts in accordance with the

provisions in § 1.408–8 for purposes ofdetermining required minimum distribu-tions for calendar years beginning on orafter January 1, 2003.

(c)(1) The required beginning date forpurposes of section 403(b)(10) is April 1of the calendar year following the later ofthe calendar year in which the employeeattains 70½ or the calendar year in whichthe employee retires from employmentwith the employer maintaining the plan.The concept of 5–percent owner has noapplication in the case of employees ofemployers descr ibed in sect ion403(b)(1)(A).

(2) The rule in A–5 of § 1.408–8 doesnot apply to section 403(b) contracts.Thus, the surviving spouse of anemployee is not permitted to treat a sec-tion 403(b) contract of which the spouseis the sole beneficiary as the spouse’sown section 403(b) contract.

(3) Annuity payments provided withrespect to retirement income accountsdescribed in section 403(b)(9) will notfail to satisfy the requirements of A–4 of§ 1.401(a)(9)–6T merely because the pay-ments are not made under an annuity con-tract purchased from an insurance com-pany, provided the relationship betweenthe annuity payments and the retirementincome accounts is not inconsistent withany rules prescribed by the Commissionerin revenue rulings, notices, and otherguidance published in the Internal Rev-enue Bulletin. See § 601.601(d)(2)(ii)(b)of this chapter.

Q–2. To what benefits under section403(b) contracts do the distribution rulesprovided in section 401(a)(9) apply?

A–2. (a) The distribution rules pro-vided in section 401(a)(9) apply to allbenefits under section 403(b) contractsaccruing after December 31, 1986 (post-’86 account balance). The distributionrules provided in section 401(a)(9) do notapply to the undistributed portion of theaccount balance under the section 403(b)contract valued as of December 31, 1986,exclusive of subsequent earnings (pre-’87account balance). Consequently, the post-’86 account balance includes earningsafter December 31, 1986, on contribu-tions made before January 1, 1987, inaddition to the contributions made afterDecember 31, 1986, and earningsthereon.

(b) The issuer or custodian of the sec-tion 403(b) contract must keep recordsthat enable it to identify the pre-’87account balance and subsequent changesas set forth in paragraph (b) of this A–2and provide such information uponrequest to the relevant employee or ben-eficiaries with respect to the contract. Ifthe issuer or custodian does not keep suchrecords, the entire account balance will betreated as subject to section 401(a)(9).

(c) In applying the distribution rules insection 401(a)(9), only the post-’86account balance is used to calculate therequired minimum distribution for a cal-endar year. The amount of any distribu-tion from a contract will be treated asbeing paid from the post-’86 account bal-ance to the extent the distribution isrequired to satisfy the minimum distribu-tion requirement with respect to that con-tract for a calendar year. Any amount dis-tributed in a calendar year from a contract

May 13, 2002 897 2002–19 I.R.B.

in excess of the required minimum distri-bution for a calendar year with respect tothat contract will be treated as paid fromthe pre-’87 account balance, if any, ofthat contract.

(d) If an amount is distributed from thepre-’87 account balance and rolled overto another section 403(b) contract, theamount will be treated as part of the post-’86 account balance in that second con-tract. However, if the pre-’87 account bal-ance under a section 403(b) contract isdirectly transferred to another section403(b) contract, the amount transferredretains its character as a pre-’87 accountbalance, provided the issuer of the trans-feree contract satisfies the recordkeepingrequirements of paragraph (b) of thisA–2.

(e) The distinction between the pre-’87account balance and the post-’86 accountbalance provided for under this A–2 hasno relevance for purposes of determiningthe portion of a distribution that is includ-ible in income under section 72.

Q–3. Must the pre-’87 account balancebe distributed in accordance with the inci-dental benefit requirement?

A–3. Yes, the pre-’87 account balancemust be distributed in accordance withthe incidental benefit requirement of§ 1.401–1(b)(1)(i). Distributions attribut-able to the pre-’87 account balance aretreated as satisfying this requirement if alldistributions from the section 403(b) con-tract (including distributions attributableto the post-’86 account balance) satisfythe requirements of § 1.401–1(b)(1)(i)without regard to this section, and distri-butions attributable to the post-’86account balance satisfy the rules of thissection. Alternatively, distributions attrib-utable to the pre-’87 account balance aretreated as satisfying the incidental benefitrequirement if all distributions from thesection 403(b) contract (including distri-butions attributable to both the pre-’87account balance and the post-’86 accountbalance) satisfy the rules of this section.

Q–4. Is the required minimum distri-bution from one section 403(b) contractof an employee permitted to be distrib-uted from another section 403(b) contractin order to satisfy section 401(a)(9)?

A–4. Yes, as provided in paragraph (b)of A–1 of this section, the distributionrules in section 401(a)(9) will be appliedto section 403(b) contracts in accordance

with the provisions in § 1.408–8. Thus,the required minimum distribution mustbe separately determined for each section403(b) contract of an employee. How-ever, as provided in A–9 of § 1.408–8with respect to IRAs, such amounts maythen be totaled and the total distributiontaken from any one or more of the indi-vidual section 403(b) contracts. However,consistent with the rules in A–9 of§ 1.408–8, only amounts in section403(b) contracts that an individual holdsas an employee may be aggregated.Amounts in section 403(b) contracts thatan individual holds as a beneficiary of thesame decedent may be aggregated, butsuch amounts may not be aggregated withamounts held in section 403(b) contractsthat the individual holds as the employeeor as the beneficiary of another decedent.Distributions from section 403(b) con-tracts or accounts will not satisfy theminimum distribution requirements forIRAs, nor will distributions from IRAssatisfy the minimum distribution require-ments for section 403(b) contracts oraccounts.

Par. 4. Section 1.408–8 is added toread as follows:

§ 1.408–8 Distribution requirements forindividual retirement plans.

The following questions and answersrelate to the distribution rules for IRAsprovided in sections 408(a)(6) and408(b)(3).

Q–1. Is an IRA subject to the distribu-tion rules provided in section 401(a)(9)for qualified plans?

A–1. (a) Yes, an IRA is subject to therequired minimum distribution rules pro-vided in section 401(a)(9). In order to sat-isfy section 401(a)(9) for purposes ofdetermining required minimum distribu-tions for calendar years beginning on orafter January 1, 2003, the rules of§§ 1.401(a)(9)–1 through 1.401(a)(9)–9and 1.401(a)(9)–6T for defined contribu-tion plans must be applied, except as oth-erwise provided in this section. Forexample, whether the 5–year rule or thelife expectancy rule applies to distribu-tions after death occurring before the IRAowner’s required beginning date is deter-mined in accordance with § 1.401(a)(9)–3and the rules of § 1.401(a)(9)–4 apply forpurposes of determining an IRA owner’sdesignated beneficiary. Similarly, the

amount of the minimum distributionrequired for each calendar year from anindividual account is determined in accor-dance with § 1.401(a)(9)–5. For purposesof this section, the term IRA means anindividual retirement account or annuitydescribed in section 408(a) or (b). TheIRA owner is the individual for whom anIRA is originally established by contribu-tions for the benefit of that individual andthat individual’s beneficiaries.

(b) For purposes of applying therequired minimum distribution rules in§§ 1.401(a)(9)–1 through 1.401(a)(9)–9and 1.401(a)(9)–6T for qualified plans,the IRA trustee, custodian, or issuer istreated as the plan administrator, and theIRA owner is substi tuted for theemployee.

(c) See A–14 and A–15 of § 1.408A–6for rules under section 401(a)(9) thatapply to a Roth IRA.

Q–2. Are IRAs that receive employercontr ibut ions under a simplif iedemployee pension (defined in section408(k)) or a SIMPLE IRA (defined insection 408(p)) treated as IRAs for pur-poses of section 401(a)(9)?

A–2. Yes, IRAs that receive employercontr ibut ions under a simplif iedemployee pension (defined in section408(k)) or a SIMPLE plan (defined insection 408(p)) are treated as IRAs, ratherthan employer plans, for purposes of sec-tion 401(a)(9) and are, therefore, subjectto the distribution rules in this section.

Q–3. In the case of distributions froman IRA, what does the term requiredbeginning date mean?

A–3. In the case of distributions froman IRA, the term required beginning datemeans April 1 of the calendar year fol-lowing the calendar year in which theindividual attains age 70½.

Q–4. What portion of a distributionfrom an IRA is not eligible for rolloverbecause the amount is a required mini-mum distribution?

A–4. The portion of a distribution thatis a required minimum distribution froman IRA and thus not eligible for rolloveris determined in the same manner as pro-vided in A–7 of § 1.402(c)–2 for distribu-tions from qualified plans. For example,if a minimum distribution is requiredunder section 401(a)(9) for a calendaryear, an amount distributed during a cal-endar year from an IRA is treated as a

2002–19 I.R.B. 898 May 13, 2002

required minimum distribution under sec-tion 401(a)(9) to the extent that the totalrequired minimum distribution for theyear under section 401(a)(9) for that IRAhas not been satisfied. This requirementmay be satisfied by a distribution fromthe IRA or, as permitted under A–9 of thissection, from another IRA.

Q–5. May an individual’s survivingspouse elect to treat such spouse’s entireinterest as a beneficiary in an individual’sIRA upon the death of the individual (orthe remaining part of such interest if dis-tribution to the spouse has commenced)as the spouse’s own account?

A–5. (a) The surviving spouse of anindividual may elect, in the mannerdescribed in paragraph (b) of this A–5, totreat the spouse’s entire interest as a ben-eficiary in an individual’s IRA (or theremaining part of such interest if distribu-tion thereof has commenced to thespouse) as the spouse’s own IRA. Thiselection is permitted to be made at anytime after the individual’s date of death.In order to make this election, the spousemust be the sole beneficiary of the IRAand have an unlimited right to withdrawamounts from the IRA. If a trust is namedas beneficiary of the IRA, this require-ment is not satisfied even if the spouse isthe sole beneficiary of the trust. If thesurviving spouse makes the election, therequired minimum distribution for thecalendar year of the election and eachsubsequent calendar year is determinedunder section 401(a)(9)(A) with thespouse as IRA owner and not section401(a)(9)(B) with the surviving spouse asthe deceased IRA owner’s beneficiary.However, if the election is made in thecalendar year containing the IRA owner’sdeath, the spouse is not required to take arequired minimum distribution as the IRAowner for that calendar year. Instead, thespouse is required to take a required mini-mum distribution for that year, deter-mined with respect to the deceased IRAowner under the rules of A–4(a) of§ 1.401(a)(9)–5, to the extent such a dis-tribution was not made to the IRA ownerbefore death.

(b) The election described in para-graph (a) of this A–5 is made by the sur-viving spouse redesignating the accountas an account in the name of the surviv-ing spouse as IRA owner rather than asbeneficiary. Alternatively, a surviving

spouse eligible to make the election isdeemed to have made the election if, atany time, either of the followingoccurs —

(1) Any amount in the IRA that wouldbe required to be distributed to the surviv-ing spouse as beneficiary under section401(a)(9)(B) is not distributed within thetime period required under section401(a)(9)(B); or

(2) Any additional amount is contrib-uted to the IRA which is subject, ordeemed to be subject, to the lifetime dis-tr ibution requirements of sect ion401(a)(9)(A).

(c) The result of an election describedin paragraph (b) of this A–5 is that thesurviving spouse shall then be consideredthe IRA owner for whose benefit the trustis maintained for all purposes under theInternal Revenue Code (e.g., section72(t)).

Q–6. How is the benefit determinedfor purposes of calculating the requiredminimum distribution from an IRA?

A–6. For purposes of determining theminimum distribution required to bemade from an IRA in any calendar year,the account balance of the IRA as ofDecember 31 of the calendar year imme-diately preceding the calendar year forwhich distributions are required to bemade is substituted in A–3 of § 1.401(a)(9)–5 for the account balance of theemployee. Except as provided in A–7 andA–8 of this section, no adjustments aremade for contributions or distributionsafter that date.

Q–7. What rules apply in the case of arollover to an IRA of an amount distrib-uted by a qualified plan or another IRA?

A–7. If the surviving spouse of anemployee rolls over a distribution from aqualified plan, such surviving spouse mayelect to treat the IRA as the spouse’s ownIRA in accordance with the provisions inA–5 of this section. In the event of anyother rollover to an IRA of an amountdistributed by a qualified plan or anotherIRA, the rules in §1.401(a)(9)–7 willapply for purposes of determining theaccount balance for the receiving IRA andthe required minimum distribution fromthe receiving IRA. However, because thevalue of the account balance is deter-mined as of December 31 of the year pre-ceding the year for which the requiredminimum distribution is being determined

and not as of a valuation date in the pre-ceding year, the account balance of thereceiving IRA is only adjusted if theamount is not received in the calendaryear in which the amount rolled over isdistributed. In that case, for purposes ofdetermining the required minimum distri-bution for the calendar year in which suchamount is actually received, the accountbalance of the receiving IRA as ofDecember 31 of the preceding year mustbe adjusted by the amount received inaccordance with A–2 of §1.401(a)(9)–7.

Q–8. What rules apply in the case of atransfer (including a recharacterization)from one IRA to another?

A–8. (a) General rule. In the case of atrustee-to-trustee transfer from one IRAto another IRA that is not a distributionand rollover, the transfer is not treated asa distribution by the transferor IRA forpurposes of section 401(a)(9). Accord-ingly, the minimum distribution require-ment with respect to the transferor IRAmust still be satisfied. Except as providedin paragraph (b) of this A–8 for recharac-terizations, after the transfer the employ-ee’s account balance and the requiredminimum distribution under the trans-feree IRA are determined in the samemanner as an account balance andrequired minimum distribution are deter-mined under an IRA receiving a rollovercontribution under A–7 of this section.

(b) Recharacterizations. If an amountis contributed to a Roth IRA that is a con-version contribution or failed conversioncontribution and that amount (plus netincome allocable to that amount) is trans-ferred to another IRA (transferee IRA) ina subsequent year as a recharacterizedcontribution, the recharacterized contribu-tion (plus allocable net income) must beadded to the December 31 account bal-ance of the transferee IRA for the year inwhich the conversion or failed conversionoccurred.

Q–9. Is the required minimum distri-bution from one IRA of an owner permit-ted to be distributed from another IRA inorder to satisfy section 401(a)(9)?

A–9. Yes, the required minimum dis-tribution must be calculated separately foreach IRA. The separately calculatedamounts may then be totaled and the totaldistribution taken from any one or moreof the individual’s IRAs under the rulesset forth in this A–9. Generally, only

May 13, 2002 899 2002–19 I.R.B.

amounts in IRAs that an individual holdsas the IRA owner may be aggregated.However, amounts in IRAs that an indi-vidual holds as a beneficiary of the samedecedent and which are being distributedunder the life expectancy rule in section401(a)(9)(B)(iii) or (iv) may be aggre-gated, but such amounts may not beaggregated with amounts held in IRAsthat the individual holds as the IRAowner or as the beneficiary of anotherdecedent. Distributions from section403(b) contracts or accounts will not sat-isfy the distribution requirements fromIRAs, nor will distributions from IRAssatisfy the distribution requirements fromsection 403(b) contracts or accounts. Dis-tributions from Roth IRAs (defined insection 408A) will not satisfy the distri-bution requirements applicable to IRAs orsection 403(b) accounts or contracts anddistributions from IRAs or section 403(b)contracts or accounts will not satisfy thedistribution requirements from RothIRAs.

Q–10. Is any reporting required by thetrustee, custodian, or issuer of an IRAwith respect to the minimum amount thatis required to be distributed from thatIRA?

A–10. Yes, the trustee, custodian, orissuer of an IRA is required to reportinformation with respect to the minimumamount required to be distributed fromthe IRA for each calendar year to indi-viduals or entities, at the time, and in themanner, prescribed by the Commissionerin revenue rulings, notices, and otherguidance published in the Internal Rev-enue Bulletin (see § 601.601(d)(2)(ii)(b)of this chapter) as well as the applicableFederal tax forms and accompanyinginstructions.

Q–11. Which amounts distributed froman IRA are taken into account in deter-mining whether section 401(a)(9) is satis-fied?

A–11. (a) General rule. Except as pro-vided in paragraph (b) of this A–11, allamounts distributed from an IRA aretaken into account in determiningwhether section 401(a)(9) is satisfied,regardless of whether the amount isincludible in income.

(b) Amounts not taken into account.The following amounts are not taken intoaccount in determining whether the

required minimum amount with respect toan IRA for a calendar year has been dis-tributed —

(1) Contributions returned pursuant tosection 408(d)(4), together with theincome allocable to these contributions;

(2) Contributions returned pursuant tosection 408(d)(5);

(3) Corrective distributions of excesssimplified employee pension contribu-tions under section 408(k)(6)(C), togetherwith the income allocable to these distri-butions; and

(4) Similar items designated by theCommissioner in revenue rulings, notices,and other guidance published in the Inter-nal Revenue Bulletin. See § 601.601(d)(2)(ii)(b) of this chapter.

PART 54 — PENSION EXCISE TAXES

Par. 5. The authority for part 54 isamended by adding the following citationto read in part as follows:

Authority: 26 U.S.C. 7805 ***

Section 54.4974–2 also issued under26 U.S.C. 4974. ***

Par. 6. Section after § 54.4974–2 isadded to read as follows:

§ 54.4974–2 Excise tax on accumulationsin qualified retirement plans.

Q–1. Is any tax imposed on a payeeunder any qualified retirement plan or anyeligible deferred compensation plan (asdefined in section 457(b)) to whom anamount is required to be distributed for ataxable year if the amount distributed dur-ing the taxable year is less than therequired minimum distribution?

A–1. Yes, if the amount distributed toa payee under any qualified retirementplan or any eligible deferred compensa-tion plan (as defined in section 457(b))for a calendar year is less than therequired minimum distribution for suchyear, an excise tax is imposed on suchpayee under section 4974 for the taxableyear beginning with or within the calen-dar year during which the amount isrequired to be distributed. The tax isequal to 50 percent of the amount bywhich such required minimum distribu-tion exceeds the actual amount distributedduring the calendar year. Section 4974provides that this tax shall be paid by thepayee. For purposes of section 4974, theterm required minimum distribution

means the minimum distribution amountrequired to be distributed pursuant to sec-tion 401(a)(9), 403(b)(10), 408(a)(6),408(b)(3), or 457(d)(2), as the case maybe, and the regulations thereunder. Exceptas otherwise provided in A–6 of this sec-tion, the required minimum distributionfor a calendar year is the required mini-mum distribution amount required to bedistributed during the calendar year. A–6of this section provides a special rule foramounts required to be distributed by anemployee’s (or individual’s) requiredbeginning date.

Q–2. For purposes of section 4974,what is a qualified retirement plan?

A–2. For purposes of section 4974,each of the following is a qualified retire-ment plan —

(a) A plan described in section 401(a)which includes a trust exempt from taxunder section 501(a);

(b) An annuity plan described in sec-tion 403(a);

(c) An annuity contract, custodialaccount, or retirement income accountdescribed in section 403(b);

(d) An individual retirement accountdescribed in section 408(a) (including aRoth IRA described in section 408A);

(e) An individual retirement annuitydescribed in section 408(b) (including aRoth IRA described in section 408A); or

(f) Any other plan, contract, account,or annuity that, at any time, has beentreated as a plan, account, or annuitydescribed in paragraphs (a) through (e) ofthis A–2, whether or not such plan, con-tract, account, or annuity currently satis-fies the applicable requirements for suchtreatment.

Q–3. If a payee’s interest under aqualified retirement plan is in the form ofan individual account, how is the requiredminimum distribution for a given calen-dar year determined for purposes of sec-tion 4974?

A–3. (a) General rule. If a payee’sinterest under a qualified retirement planis in the form of an individual accountand distribution of such account is notbeing made under an annuity contractpurchased in accordance with A–4 of § 1.401(a)(9)–6T, the amount of the requiredminimum distribution for any calendaryear for purposes of section 4974 is therequired minimum distribution amount

2002–19 I.R.B. 900 May 13, 2002

required to be distributed for such calen-dar year in order to satisfy the minimumdistribution requirements in § 1.401(a)(9)–5 as provided in the following(whichever is applicable) —

(1) Sect ion 401(a)(9) and§§ 1.401(a)(9)–1 through 1.401(a)(9)–5and 1.401(a)(9)–7 through 1.401(a)(9)–9in the case of a plan described in section401(a) which includes a trust exemptunder section 501(a) or an annuity plandescribed in section 403(a);

(2) Section 403(b)(10) and § 1.403(b)–3 (in the case of an annuity contract,custodial account, or retirement incomeaccount described in section 403(b));

(3) Section 408(a)(6) or (b)(3) and§ 1.408–8 (in the case of an individualretirement account or annuity describedin section 408(a) or (b)); or

(4) Section 457(d) in the case of aneligible deferred compensation plan (asdefined in section 457(b)).

(b) Default provisions. Unless other-wise provided under the qualified retire-ment plan (or, if applicable, the governinginstrument of the qualified retirementplan), the default provisions in A–4(a) of§ 1.401(a)(9)–3 apply in determining therequired minimum distribution for pur-poses of section 4974.

(c) Five-year rule. If the 5–year rule insection 401(a)(9)(B)(ii) applies to the dis-tribution to a payee, no amount isrequired to be distributed for any calendaryear to satisfy the applicable enumeratedsection in paragraph (a) of this A–3 untilthe calendar year which contains the date5 years after the date of the employee’sdeath. For the calendar year which con-tains the date 5 years after the employee’sdeath, the required minimum distributionamount required to be distributed to sat-isfy the applicable enumerated section isthe payee’s entire remaining interest inthe qualified retirement plan.

Q–4. If a payee’s interest in a qualifiedretirement plan is being distributed in theform of an annuity, how is the amount ofthe required minimum distribution deter-mined for purposes of section 4974?

A–4. If a payee’s interest in a qualifiedretirement plan is being distributed in theform of an annuity (either directly fromthe plan, in the case of a defined benefitplan, or under an annuity contract pur-chased from an insurance company), theamount of the required minimum distri-

bution for purposes of section 4974 willbe determined as follows:

(a) Permissible annuity distributionoption. A permissible annuity distributionoption is an annuity contract (or, in thecase of annuity distributions from adefined benefit plan, a distributionoption) which specifically provides fordistributions which, if made as provided,would for every calendar year equal orexceed the minimum distribution amountrequired to be distributed to satisfy theapplicable section enumerated in para-graph (a) of A–2 of this section for everycalendar year. If the annuity contract (or,in the case of annuity distributions from adefined benefit plan, a distributionoption) under which distributions to thepayee are being made is a permissibleannuity distribution option, the requiredminimum distribution for a given calen-dar year will equal the amount which theannuity contract (or distribution option)provides is to be distributed for that cal-endar year.

(b) Impermissible annuity distributionoption. An impermissible annuity distri-bution option is an annuity contract (or, inthe case of annuity distributions from adefined benefit plan, a distributionoption) under which distributions to thepayee are being made that specificallyprovides for distributions which, if madeas provided, would for any calendar yearbe less than the minimum distributionamount required to be distributed to sat-isfy the applicable section enumerated inparagraph (a) of A–3 of this section. If theannuity contract (or, in the case of annu-ity distributions from a defined benefitplan, the distribution option) under whichdistributions to the payee are being madeis an impermissible annuity distributionoption, the required minimum distributionfor each calendar year will be determinedas follows:

(1) If the qualified retirement planunder which distributions are being madeis a defined benefit plan, the minimumdistribution amount required to be distrib-uted each year will be the amount whichwould have been distributed under theplan if the distribution option underwhich distributions to the payee werebeing made was the following permis-sible annuity distribution option:

(i) In the case of distributions com-mencing before the death of the

employee, if there is a designated benefi-ciary under the impermissible annuitydistribution option for purposes of section401(a)(9), the permissible annuity distri-bution option is the joint and survivorannuity option under the plan for the livesof the employee and the designated ben-eficiary that provides for the greatestlevel amount payable to the employeedetermined on an annual basis. If the plandoes not provide such an option or thereis no designated beneficiary under theimpermissible distribution option for pur-poses of section 401(a)(9), the permis-sible annuity distribution option is the lifeannuity option under the plan payable forthe life of the employee in level amountswith no survivor benefit.

(ii) In the case of distributions com-mencing after the death of the employee,if there is a designated beneficiary underthe impermissible annuity distributionoption for purposes of section 401(a)(9),the permissible annuity distributionoption is the life annuity option under theplan payable for the life of the designatedbeneficiary in level amounts. If there isno designated beneficiary, the 5–year rulein section 401(a)(9)(B)(ii) applies. Seeparagraph (b)(3) of this A–4. The deter-mination of whether or not there is a des-ignated beneficiary and the determinationof which designated beneficiary’s life isto be used in the case of multiple benefi-ciaries will be made in accordance with§ 1.401(a)(9)–4 and A–7 of § 1.401(a)(9)–5. If the defined benefit plan doesnot provide for distribution in the form ofthe applicable permissible distributionoption, the required minimum distributionfor each calendar year will be an amountas determined by the Commissioner.

(2) If the qualified retirement planunder which distributions are being madeis a defined contribution plan and theimpermissible annuity distribution optionis an annuity contract purchased from aninsurance company, the minimum distri-bution amount required to be distributedeach year will be the amount that wouldhave been distributed in the form of anannuity contract under the permissibleannuity distribution option under the plandetermined in accordance with paragraph(b)(1) of this A–4 for defined benefitplans. If the defined contribution plandoes not provide the applicable permis-sible annuity distribution option, the

May 13, 2002 901 2002–19 I.R.B.

required minimum distribution for eachcalendar year will be the amount thatwould have been distributed under anannuity described in paragraph (b)(2)(i)or (ii) of this A–4 purchased with theemployee’s or individual’s account usedto purchase the annuity contract that isthe impermissible annuity distributionoption.

(i) In the case of distributions com-mencing before the death of theemployee, if there is a designated benefi-ciary under the impermissible annuitydistribution option for purposes of section401(a)(9), the annuity is a joint and survi-vor annuity for the lives of the employeeand the designated beneficiary which pro-vides level annual payments and whichwould have been a permissible annuitydistribution option. However, the amountof the periodic payment which wouldhave been payable to the survivor will bethe applicable percentage under the tablein A–2(c) of § 1.401(a)(9)–6T of theamount of the periodic payment whichwould have been payable to the employeeor individual. If there is no designatedbeneficiary under the impermissible dis-tribution option for purposes of section401(a)(9), the annuity is a life annuity forthe life of the employee with no survivorbenefit which provides level annual pay-ments and which would have been a per-missible annuity distribution option.

(ii) In the case of a distribution com-mencing after the death of the employee,if there is a designated beneficiary underthe impermissible annuity distributionoption for purposes of section 401(a)(9),the annuity option is a life annuity for thelife of the designated beneficiary whichprovides level annual payments andwhich would have been a permissibleannuity distribution option. If there is nodesignated beneficiary, the 5–year rule insection 401(a)(9)(B)(ii) applies. See para-graph (b)(3) of this A–4. The amount ofthe payments under the annuity contractwill be determined using the interest rateand actuarial tables prescribed under sec-tion 7520 determined using the datedetermined under A–3 of § 1.401(a)(9)–3when distributions are required to com-mence and using the age of the benefi-ciary as of the beneficiary’s birthday inthe calendar year that contains that date.The determination of whether or not thereis a designated beneficiary and the deter-

mination of which designated beneficia-ry’s life is to be used in the case of mul-tiple beneficiaries will be made inaccordance with § 1.401(a)(9)–4 and A–7of § 1.401(a)(9)–5.

(3) If the 5–year rule in section401(a)(9)(B)(ii) applies to the distributionto the payee under the contract (or distri-bution option), no amount is required tobe distributed to satisfy the applicableenumerated section in paragraph (a) ofthis A–4 until the calendar year whichcontains the date 5 years after the date ofthe employee’s death. For the calendaryear which contains the date 5 years afterthe employee’s death, the required mini-mum distribution amount required to bedistributed to satisfy the applicable enu-merated section is the payee’s entireremaining interest in the annuity contract(or under the plan in the case of distribu-tions from a defined benefit plan).

(4) If the plan provides that therequired beginning date for purposes ofsection 401(a)(9) for all employees isApril 1 of the calendar year following thecalendar year in which the employeeattained age 70½ in accordance withparagraph A–2(e) of § 1.401(a)(9)–2, therequired minimum distribution for eachcalendar year for an employee who is nota 5–percent owner for purposes of thissection will be the lesser of the amountdetermined based on the required begin-ning date as set forth in A–2(a) of§ 1.401(a)(9)–2 or the required beginningdate under the plan. Thus, for example, ifan employee dies after attaining age 70½,but before April 1 of the calendar yearfollowing the calendar year in which theemployee retired, and there is no desig-nated beneficiary as of September 30 ofthe year following the employee’s year ofdeath, required minimum distributions forcalendar years after the calendar yearcontaining the employee’s date of deathmay be based on either the applicable dis-tribution period provided under either the5–year rule of A–1 of § 1.401(a)(9)–3 orthe employee’s remaining life expectancyas set forth in A–5(c)(3) of§ 1.401(a)(9)–5.

Q–5. If there is any remaining benefitwith respect to an employee (or IRAowner) after any calendar year in whichthe entire remaining benefit is required tobe distributed under section 401(a)(9),what is the amount of the required mini-

mum distribution for each calendar yearsubsequent to such calendar year?

A–5. If there is any remaining benefitwith respect to an employee (or IRAowner) after the calendar year in whichthe entire remaining benefit is required tobe distributed, the required minimum dis-tribution for each calendar year subse-quent to such calendar year is the entireremaining benefit.

Q–6. With respect to which calendaryear is the excise tax under section 4974imposed in the case in which the amountnot distributed is an amount required tobe distributed by April 1 of a calendaryear (by the employee’s or individual’srequired beginning date)?

A–6. In the case in which the amountnot paid is an amount required to be paidby April 1 of a calendar year, suchamount is a required minimum distribu-tion for the previous calendar year, i.e.,for the employee’s or the individual’sfirst distribution calendar year. However,the excise tax under section 4974 isimposed for the calendar year containingthe last day by which the amount isrequired to be distributed, i.e., the calen-dar year containing the employee’s orindividual’s required beginning date, eventhough the preceding calendar year is thecalendar year for which the amount isrequired to be distributed. There is also arequired minimum distribution for thecalendar year which contains the employ-ee’s or individual’s required beginningdate. Such distribution is also required tobe made during the calendar year whichcontains the employee’s or individual’srequired beginning date.

Q–7. Are there any circumstanceswhen the excise tax under section 4974for a taxable year may be waived?

A–7. (a) Reasonable cause. The taxunder section 4974(a) may be waived ifthe payee described in section 4974(a)establishes to the satisfaction of the Com-missioner the following —

(1) The shortfall described in section4974(a) in the amount distributed in anytaxable year was due to reasonable error;and

(2) Reasonable steps are being taken toremedy the shortfall.

(b) Automatic waiver. The tax undersection 4974 will be automaticallywaived, unless the Commissioner deter-mines otherwise, if —

2002–19 I.R.B. 902 May 13, 2002

(1) The payee described in section4974(a) is an individual who is the solebeneficiary and whose required minimumdistribution amount for a calendar year isdetermined under the life expectancy ruledescribed in § 1.401(a)(9)–3 A–3 in thecase of an employee’s or individual’sdeath before the employee’s or individu-al’s required beginning date; and

(2) The employee’s or individual’sentire benefit to which that beneficiary is

entitled is distributed by the end of thefifth calendar year following the calendaryear that contains the employee’s or indi-vidual’s date of death.

PART 602—OMB CONTROL NUM-BERS UNDER THE PAPERWORKREDUCTION ACT

Par. 7. The authority citation for part602 continues to read as follows:

Authority: 26 U.S.C. 7808.

Par. 8. In § 602.101, paragraph (b) isamended by adding entries for“1.401(a)(9)–1” , “1.401(a)(9)–3” ,“1.401(a)(9)–4”, and “1.403(b)–3” innumerical order to the table to read inpart as follows:

§ 602.101 OMB Control numbers.

* * * * *(b) * * *

CFR part or section whereidentified and described

Current OMBcontrol No.

* * * * *

1.401(a)(9)–1............................................................................................................................................................ 1545–1573

* * * * *

1.401(a)(9)–3............................................................................................................................................................ 1545–1466

* * * * *

1.401(a)(9)–4............................................................................................................................................................ 1545–1573

* * * * *

1.403(b)–3 ................................................................................................................................................................ 1545–0996

* * * * *

Robert E. Wenzel,Deputy Commissioner of

Internal Revenue.

Approved March 26, 2002.

Mark Weinberger,Assistant Secretary of the Treasury.

(Filed by the Office of the Federal Register on April16, 2002, 8:45 a.m., and published in the issue ofthe Federal Register for April 17, 2002, 67 F.R.18988)

Section 412.—MinimumFunding Standards

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, page 904.

Section 467.—CertainPayments for the Use ofProperty or Services

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, page 904.

Section 468.—Special Rulesfor Mining and Solid WasteReclamation and ClosingCosts

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, page 904.

Section 482.—Allocation ofIncome and DeductionsAmong Taxpayers

Federal short-term, mid-term, and long-termrates are set forth for the month of May 2002. SeeRev. Rul. 2002–25, page 904.

Section 483.—Interest onCertain Deferred Payments

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, page 904.

Section 642.—Special Rulesfor Credits and Deductions

Federal short-term, mid-term, and long-termrates are set forth for the month of May 2002. SeeRev. Rul. 2002–25, page 904.

May 13, 2002 903 2002–19 I.R.B.

Section 807.—Rules forCertain Reserves

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, on this page.

Section 846.—DiscountedUnpaid Losses Defined

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, on this page.

Section 1041.—Transfers ofProperty Between Spouses orIncident to Divorce

26 CFR 1.1041–1T: Treatment of transfer of prop-erty between spouses or incident to divorce.

A taxpayer who transfers interests in nonstatu-tory stock options and nonqualified deferred com-pensation to the taxpayer’s former spouse incidentto divorce is not required to include an amount ingross income upon the transfer. Rather, the formerspouse is required to include an amount in gross

income when the former spouse exercises the stockoptions or when the deferred compensation is paidor made available to the former spouse. See Rev.Rul. 2002–22, page 849.

Section 1274.—Determi-nation of Issue Price in theCase of Certain DebtInstruments Issued forProperty

(Also sections 42, 280G, 382, 412, 467, 468, 482,483, 642, 807, 846, 1288, 7520, 7872.)

Federal rates; adjusted federalrates; adjusted federal long-term rate;and the long-term exempt rate. For pur-poses of sections 382, 1274, 1288, andother sections of the Code, tables set forththe rates for May 2002.

Rev. Rul. 2002–25

This revenue ruling provides variousprescribed rates for federal income taxpurposes for May 2002 (the currentmonth). Table 1 contains the short-term,mid-term, and long-term applicable fed-eral rates (AFR) for the current month forpurposes of section 1274(d) of the Inter-nal Revenue Code. Table 2 contains theshort-term, mid-term, and long-termadjusted applicable federal rates (adjustedAFR) for the current month for purposesof section 1288(b). Table 3 sets forth theadjusted federal long-term rate and thelong-term tax-exempt rate described insection 382(f). Table 4 contains theappropriate percentages for determiningthe low-income housing credit describedin section 42(b)(2) for buildings placed inservice during the current month. Finally,Table 5 contains the federal rate for deter-mining the present value of an annuity, aninterest for life or for a term of years, ora remainder or a reversionary interest forpurposes of section 7520.

REV. RUL. 2002–25 TABLE 1

Applicable Federal Rates (AFR) for May 2002

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-Term

AFR 3.21% 3.18% 3.17% 3.16%

110% AFR 3.53% 3.50% 3.48% 3.47%

120% AFR 3.86% 3.82% 3.80% 3.79%

130% AFR 4.17% 4.13% 4.11% 4.09%

Mid-Term

AFR 4.99% 4.93% 4.90% 4.88%

110% AFR 5.49% 5.42% 5.38% 5.36%

120% AFR 6.01% 5.92% 5.88% 5.85%

130% AFR 6.51% 6.41% 6.36% 6.33%

150% AFR 7.54% 7.40% 7.33% 7.29%

175% AFR 8.82% 8.63% 8.54% 8.48%

2002–19 I.R.B. 904 May 13, 2002

REV. RUL. 2002–25 TABLE 1—CONTINUED

Applicable Federal Rates (AFR) for May 2002

Period for Compounding

Annual Semiannual Quarterly Monthly

Long-Term

AFR 5.85% 5.77% 5.73% 5.70%

110% AFR 6.45% 6.35% 6.30% 6.27%

120% AFR 7.04% 6.92% 6.86% 6.82%

130% AFR 7.64% 7.50% 7.43% 7.39%

REV. RUL. 2002–25 TABLE 2

Adjusted AFR for May 2002

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-termadjusted AFR 2.56% 2.54% 2.53% 2.53%

Mid-termadjusted AFR 3.98% 3.94% 3.92% 3.91%

Long- t e rmadjusted AFR 5.01% 4.95% 4.92% 4.90%

REV. RUL. 2002–25 TABLE 3

Rates Under Section 382 for May 2002

Adjusted federal long-term rate for the current month 5.01%

Long-term tax-exempt rate for ownership changes during the current month (the highestof the adjusted federal long-term rates for the current month and the prior two months.) 5.01%

REV. RUL. 2002–25 TABLE 4

Appropriate Percentages Under Section 42(b)(2) for May 2002

Appropriate percentage for the 70% present value low-income housing credit 8.27%

Appropriate percentage for the 30% present value low-income housing credit 3.54%

May 13, 2002 905 2002–19 I.R.B.

REV. RUL. 2002–25 TABLE 5

Rate Under Section 7520 for May 2002

Applicable federal rate for determining the present value of an annuity, an interest for lifeor a term of years, or a remainder or reversionary interest 6.0%

Section 1288.—Treatment ofOriginal Issue Discounts onTax-Exempt Obligations

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, page 904.

Section 2032A.—Valuation ofCertain Farm, etc., RealProperty

26 CFR 20.2032A–4: Method of valuing farm realproperty.

Special use value; farms; interestrates. The 2002 interest rates to be usedin computing the special use value offarm real property for which an electionis made under section 2032A of the Codeare listed for estates of decedents.

Rev. Rul. 2002–26

This revenue ruling contains a list ofthe average annual effective interest rateson new loans under the Farm Credit Banksystem. This revenue ruling also containsa list of the states within each FarmCredit Bank District.

Under § 2032A(e)(7)(A)(ii) of theInternal Revenue Code, rates on newFarm Credit Bank loans are used in com-puting the special use value of real prop-erty used as a farm for which an electionis made under § 2032A. The rates in thisrevenue ruling may be used by estatesthat value farmland under § 2032A as ofa date in 2002.

Average annual effective interest rates,calculated in accordance with § 2032A(e)(7)(A) and § 20.2032A–4(e) of theEstate Tax Regulations, to be used under§ 2032A(e)(7)(A)(ii), are set forth in theaccompanying Table of Interest Rates

(Table 1). The states within each FarmCredit Bank District are set forth in theaccompanying Table of Farm Credit BankDistricts (Table 2).

Rev. Rul. 81–170 (1981–1 C.B. 454)contains an illustrative computation of anaverage annual effective interest rate. Therates applicable for valuation in 2001 arein Rev. Rul. 2001–21 (2001–1 C.B.1144). For rate information for years priorto 2001, see Rev. Rul. 2000–26 (2000–1C.B. 1124), and other revenue rulings thatare referenced therein.

DRAFTING INFORMATION

The principal author of this revenueruling is Lane Damazo of the Office ofthe Associate Chief Counsel(Passthroughs and Special Industries). Forfurther information regarding this revenueruling, contact Lane Damazo at (202)622–3090 (not a toll-free call).

REV. RUL. 2002–26 TABLE 1

TABLE OF INTEREST RATES(Year of Valuation 2002)

Farm Credit Bank District in Which Property Is LocatedInterest

Rate

Columbia ............................................................................................................................................................ 9.68

Omaha/Spokane ................................................................................................................................................. 7.77

Sacramento ......................................................................................................................................................... 7.66

St. Paul ............................................................................................................................................................... 7.88

Springfield .......................................................................................................................................................... 8.16

Texas ................................................................................................................................................................... 7.80

Wichita ............................................................................................................................................................... 7.96

2002–19 I.R.B. 906 May 13, 2002

REV. RUL. 2002–26 TABLE 2

TABLE OF FARM CREDIT BANK DISTRICTS

District States

Columbia ............................................................. Delaware, District of Columbia, Florida, Georgia, Maryland,North Carolina, Pennsylvania, South Carolina, Virginia, West Virginia.

Omaha/Spokane .................................................. Alaska, Idaho, Iowa, Montana, Nebraska, Oregon, South Dakota,Washington, Wyoming.

Sacramento .......................................................... Arizona, California, Hawaii, Nevada, Utah.

St. Paul ................................................................ Arkansas, Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri,North Dakota, Ohio, Tennessee, Wisconsin.

Springfield ........................................................... Connecticut, Maine, Massachusetts, New Hampshire, New Jersey,New York, Rhode Island, Vermont.

Texas .................................................................... Alabama, Louisiana, Mississippi, Texas.

Wichita ................................................................ Colorado, Kansas, New Mexico, Oklahoma.

Section 7520.—ValuationTables

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, page 904.

Section 7872.—Treatment ofLoans With Below-MarketInterest Rates

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the monthof May 2002. See Rev. Rul. 2002–25, page 904.

May 13, 2002 907 2002–19 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous

Notice of Proposed RulesRegarding EmploymentTaxation of Transfers Incidentto Divorce

Notice 2002–31

I. Overview and Purpose

This notice sets forth the contents of aproposed revenue ruling explaining howthe Federal Insurance Contributions Act(FICA), the Federal Unemployment TaxAct (FUTA), and the Collection ofIncome Tax at Source on Wages (incometax withholding) apply to a transfer ofinterests in nonstatutory stock options andnonqualified deferred compensation to aformer spouse incident to a divorce. Theproposed revenue ruling also containsproposed reporting requirements withrespect to such transferred interests.

This notice solicits comments regard-ing the proposed revenue ruling. TheDepartment of the Treasury and the Inter-nal Revenue Service anticipate issuing afinal revenue ruling after the commentshave been considered.

II. Proposed Revenue Ruling

The facts in the proposed revenue rul-ing below are the same as in Rev. Rul.2002–22, page 849, this Bulletin, and arerestated here for convenience.

PROPOSED REVENUE RULING

ISSUES

(1) What is the effect upon taxationunder the Federal Insurance ContributionsAct (FICA), the Federal UnemploymentTax Act (FUTA), and the Collection ofIncome Tax at Source on Wages (incometax withholding) of a transfer of interestsin nonstatutory stock options and non-qualified deferred compensation to aformer spouse incident to divorce?

(2) What is the appropriate reportingof income and/or wages recognized withrespect to nonstatutory stock options and

nonqualified deferred compensationtransferred to a former spouse incident todivorce?

FACTS

Prior to their divorce in 2002, A and Bwere married individuals residing in StateX who used the cash receipts and dis-bursements method of accounting.

A is employed by Corporation Y. Priorto the divorce, Y issued nonstatutorystock options to A as part of A’s compen-sation. The nonstatutory stock options didnot have a readily ascertainable fair mar-ket value within the meaning of section1.83–7(b) of the Income Tax Regulationsat the time granted to A, and thus noamount was included in A’s gross incomewith respect to those options at the timeof grant.

Y maintains two unfunded, deferredcompensation plans under which A earnsthe right to receive post-employment pay-ments from Y. Under one of the deferredcompensation plans, participants areentitled to payments based on the balanceof individual accounts of the kinddescribed in section 31.3121(v)(2)–1(c)(1)(ii) of the Employment Tax Regu-lations. By the time of A’s divorce fromB, A had an account balance of $100xunder that plan. Under the seconddeferred compensation plan maintainedby Y, participants are entitled to receivesingle sum or periodic payments follow-ing separation from service based on aformula reflecting their years of serviceand compensation history with Y. By thetime of A’s divorce from B, A had accruedthe right to receive a single sum paymentof $50x under that plan following A’s ter-mination of employment with Y. A’s con-tractual rights to the deferred compensa-tion benefits under these plans were notcontingent on A’s performance of futureservices for Y.

Under the law of State X, stock optionsand unfunded deferred compensationrights earned by a spouse during theperiod of marriage are marital propertysubject to equitable division between thespouses in the event of divorce. Pursuantto the property settlement incorporatedinto their judgment of divorce, A trans-

ferred to B (1) one-third of the nonstatu-tory stock options issued to A by Y, (2)the right to receive deferred compensa-tion payments from Y under the accountbalance plan based on $75x of A’saccount balance under that plan at thetime of the divorce, and (3) the right toreceive a single sum payment of $25xfrom Y under the other deferred compen-sation plan upon A’s termination ofemployment with Y.

In 2006, B exercises all of the trans-ferred stock options and receives Y stockwith a fair market value in excess of theexercise price of the options. In 2011, Aterminates employment with Y, and Breceives a single sum payment of $150xfrom the account balance plan and asingle sum payment of $25x from theother deferred compensation plan.

LAW AND ANALYSIS

Rev. Rul. 2002–22, page 849, con-cludes that a taxpayer who transfers inter-ests in nonstatutory stock options andnonqualified deferred compensation tothe taxpayer’s former spouse incident todivorce is not required to include anamount in gross income upon the transfer.The ruling also concludes that the formerspouse, rather than the taxpayer, isrequired to include an amount in grossincome when the former spouse exercisesthe stock options or when the deferredcompensation is paid or made available tothe former spouse.

FICA Wages

Sections 3101 and 3111 impose FICAtaxes on “wages” as that term is definedin section 3121(a). FICA taxes consist ofthe Old-Age, Survivors and DisabilityInsurance tax (social security tax) and theHospital Insurance tax (Medicare tax).These taxes are imposed on both theemployer and employee. Sections 3101(a)and 3101(b) impose the employee por-tions of the social security tax and theMedicare tax, respectively. Sections3111(a) and (b) impose the employer por-tions of the social security tax and theMedicare tax, respectively.

2002–19 I.R.B. 908 May 13, 2002

Section 3102(a) provides that theemployee portion of FICA taxes must becollected by the employer of the taxpayerby deducting the amount of the tax fromwages as and when paid. Section31.3102(a)–1(a) of the Employment TaxRegulations provides that the employer isrequired to collect the tax, notwithstand-ing that wages are paid in somethingother than money. Section 3102(b) pro-vides that every employer required todeduct the FICA employee tax is liablefor the payment of that tax, and is indem-nified against the claims and demands ofany person for the amount of any suchpayment made by such employer.

The term “wages” is defined in section3121(a) for FICA purposes as all remu-neration for employment, including thecash value of all remuneration (includingbenefits) paid in any medium other thancash, with certain specific exceptions.Section 3121(b) defines “employment” asany service, of whatever nature, per-formed by an employee for the personemploying him, with certain specificexceptions.

Section 31.3121(a)–1(e) of the regula-tions provides that in general the mediumin which the remuneration is paid isimmaterial. It may be paid in cash orother than in cash. Remuneration paid inany medium other than cash is computedon the basis of the fair market value ofsuch items at the time of payment.

Under section 3121(v)(2), amountsdeferred under a nonqualified deferredcompensation plan generally are to betaken into account when the services areperformed or, if later, when there is nosubstantial risk of forfeiture. To the extentbenefit payments under a nonqualifieddeferred compensation plan are attribut-able to amounts deferred under the planthat have been taken into account forFICA tax purposes, the benefit paymentsare not treated as FICA wages. To theextent benefit payments are attributable toan amount deferred that has not beentaken into account for FICA tax purposes,then the benefit payments are treated asFICA wages. See section 31.3121(v)(2)–1(d)(1)(ii) of the regulations.

In the Social Security Amendments of1983, Public Law No. 98–21 (1983–2C.B. 309), Congress added language tosection 3121(a) providing that nothing inthe income tax withholding regulations

that provides an exclusion from wages forincome tax withholding purposes shall beconstrued to require a similar exclusionfrom wages for FICA purposes. The leg-islative history in connection with thisprovision states that “[s]ince the [social]security system has objectives which aresignificantly different from the objectiveunderlying the income tax withholdingrules, the committee believes thatamounts exempt from income tax with-holding should not be exempt from FICAtax unless Congress provides an explicittax exclusion.” S. Rep. No. 23, 98thCong., 1st Sess. at 42 (1983).

The fact that payments are includiblein the gross income of an individual otherthan an employee does not remove thepayments from FICA wages. See Rev.Rul. 71–116 (1971–1 C.B. 277) holdingthat payments of wages to an employee ina community property state are FICAwages although one-half of the wages isincludible in the gross income of the non-employee spouse. See also Rev. Rul.86–109 (1986–2 C.B. 196) which holdsthat payments of remuneration foremployment made after the death of anemployee and in the calendar year of thedeath are wages for FICA tax purposes,although the amounts are includible in thegross income of the recipient and not theemployee.

Rev. Rul. 2002–22 holds that, upon theexercise of nonstatutory stock optionsobtained by a nonemployee spouse pursu-ant to divorce, the property transferred tothe nonemployee spouse by the employerhas the same character and is includiblein the income of the nonemployee spouseunder section 83(a) to the same extent asthe property would have been includiblein the income of the employee spouse hadthe options been retained and exercisedby the employee spouse. Rev. Rul.2002–22 further holds that nonqualifieddeferred compensation, the right to whichis obtained by a nonemployee spouse pur-suant to divorce, paid or made availableto the nonemployee spouse has the samecharacter and is includible in the incomeof the nonemployee spouse to the sameextent as the compensation would havebeen includible in the income of theemployee spouse had the compensationbeen paid or made available to theemployee spouse. Nothing in section1041 excludes payments to a person other

than an employee from wages for pur-poses of FICA. In the absence of a spe-cific provision that would exclude thesepayments from FICA wages, the compen-sation realized on the exercise of thestock options by the nonemployee spouseand the deferred compensation paid ormade available to the nonemployeespouse retain their character as wages ofthe employee spouse for purposes ofFICA. Thus, the payment of such remu-neration is subject to FICA to the sameextent as if paid to the employee spouse.

Accordingly, the nonqualified deferredcompensation paid or made available tothe former spouse remains subject to therules of section 3121, including section3121(v) and the regulations thereunder, todetermine when and whether FICA tax isapplicable. Thus, to the extent the amountdeferred has been previously taken intoaccount for FICA purposes, the distribu-tion to the former spouse of the proceedsof the account balance plan would not betreated as wages for FICA tax purposes.However, to the extent the amountdeferred has not been previously takeninto account for FICA tax purposes, thedistribution to the former spouse of theproceeds of the account balance planwould be wages of the employee forFICA tax purposes. Similarly, under sec-tion 3121 and the regulations thereunder,a former spouse’s exercise of nonquali-fied stock options results in FICA wagesof the employee to the extent that the fairmarket value of the stock received pursu-ant to the exercise of the option exceedsthe option exercise price.

To the extent the distributed paymentsare FICA wages, the employee FICA taxis deducted from the payment made to thetransferee. The amount includible in thegross income of the transferee is notreduced by any FICA withholding fromthe payments (including transfers of prop-erty) to the transferee. See Rev. Rul.86–109 and Rev. Rul. 71–116.

Because A was the service performerand the remuneration relates to A’s ser-vice in employment with Y, the wages,although paid to B, are FICA wages of A.See Rev. Rul. 71–116. Thus, because thepayments are wages for FICA tax pur-poses, the payments are reportable by Yas social security wages and Medicarewages on a Form W–2, Wage and TaxStatement, issued for A, and the social

May 13, 2002 909 2002–19 I.R.B.

security tax withheld and Medicare taxwithheld are also reportable on the FormW–2 for A. Y may take into account otherwages previously paid to A in that calen-dar year in determining whether these dis-tributions are excepted from social secu-rity wages under section 3121(a)(1), themaximum social security wage baseexception. Finally, these payments shouldnot be included in Box 1, Wages, tips,other compensation, nor should anyamount be reflected in Box 2, Federalincome tax withheld, of the Form W–2issued to A with respect to these pay-ments.

FUTA

The FUTA taxation provisions appli-cable with respect to nonqualified stockoptions and nonqualified deferred com-pensation plans are similar to the FICAprovisions, except that only the employerpays the tax imposed under FUTA. Seesections 3301, 3306(b), and 3306(r)(2)and the regulations thereunder. Becauseof the similar statutory provisions, FUTAtaxation applies at the same time and inthe same manner as FICA. To the extentwage taxation applies, the wages areFUTA wages of the employee A, subjectto the maximum wage base contained insection 3306(b)(1). As with FICA, wagespreviously paid to the employee duringthe calendar year may be taken intoaccount in determining whether theseamounts qualify for the FUTA maximumwage base exception.

Income Tax Withholding

Section 3402(a) of the Code, relatingto income tax withholding, generallyrequires every employer making a pay-ment of wages to deduct and withholdupon those wages a tax determined inaccordance with prescribed tables orcomputational procedures.

Section 3401(a) provides that “wages”for income tax withholding purposesmeans all remuneration for services per-formed by an employee for his employer,including the cash value of all remunera-tion (including benefits) paid in anymedium other than cash, with certainexceptions not pertinent to this ruling.

Under section 31.3402(a)–1(c) of theregulations, an employer is required to

deduct and withhold the tax notwithstand-ing that the wages are paid in somethingother than money (for example, wagespaid in stock or bonds) and to pay overthe tax in money. If the wages are paid inproperty other than money, the employershould make necessary arrangements toinsure that the amount of the tax requiredto be withheld is available for payment inmoney.

Section 31 provides that the amountwithheld from wages as income tax with-holding will be allowed to the “recipientof the income” as a credit against theincome taxes imposed by Subtitle A. Sec-tion 1.31–1(a) of the Income Tax Regula-tions provides that the “recipient of theincome” for purposes of the section 31credit is the individual who is subject toincome taxes upon the wages from whichthe tax was withheld. For example, if anemployee spouse and nonemployeespouse are domiciled in a communityproperty state and file separate incometax returns, each reporting for income taxpurposes one-half of the wages receivedby the employee spouse, each spouse isentitled to one-half of the credit allowablefor the tax withheld at the source withrespect to the wages.

Because the compensatory intereststransferred under section 1041 to the non-employee spouse pursuant to the divorceremain taxable for employment tax pur-poses to the same extent as if retained bythe employee spouse, the income recog-nized by the nonemployee spouse withrespect to the exercise of the nonqualifiedstock options and the distributions fromthe nonqualified deferred compensationplans are remuneration for employmentand wages for purposes of income taxwithholding under section 3402. Pursuantto section 1.31–1(a) of the regulations,because the income recognized withrespect to this compensation is includiblein the gross income of the nonemployeespouse, the nonemployee spouse isentitled to the credit for the income taxwithheld with respect to these wage pay-ments.

Reporting of payments

Section 6051 requires payors of remu-neration to an employee to report thosepayments on Form W–2, Wage and TaxStatement. Because the former spouse is

not an employee, the reporting require-ments of section 6051 do not apply.

Section 6041(a) requires that all per-sons engaged in a trade or business whomake a payment to a third party duringthe course of such business must file areturn with the IRS, reporting all pay-ments totaling $600 or more in a taxableyear, of rent, salaries, wages, premiums,annuities, compensations, remunerations,emoluments, or other fixed or determin-able gains, profits and income. In thiscase, pursuant to section 6041(a), Y mustfile an information return reporting boththe income B realized from B’s exerciseof the nonstatutory stock options and thepayments made to B from the deferredcompensation plans.

Under section 31.6051–1(a)(1) of theregulations, the wages of an employeethat are subject to social security andMedicare taxes are included in the appro-priate boxes on the Form W–2 issued tothe employee. See also Rev. Rul. 71–116.

Because there is no provision for theissuance of Form W–2 in the name of anonemployee spouse, the income realizedupon the exercise of the nonqualifiedstock options would be reportable to thenonemployee spouse by Y on Form 1099–MISC, Miscellaneous Income, issued tothe nonemployee spouse, in Box 3, OtherIncome, with the income tax withheldreported in Box 4, Federal income taxwithheld. The payments to the nonem-ployee spouse B from the nonqualifieddeferred compensation plans and thewithholding thereon would also be report-able by Y on a Form 1099–MISC in Box3, with the income tax withheld reportedin Box 4.

Social security wages, social securitytax withheld, Medicare wages, and Medi-care taxes withheld, if applicable, arereported on the employee spouse’s FormW–2 as described above.

Employers would report the incometax withholding on wages paid to the non-employee spouse on Form 945, AnnualReturn of Withheld Federal Income Tax.The social security and Medicare tax paidwith respect to these wages of theemployee spouse would be reported onForm 941, Employer’s Quarterly FederalTax Return. FUTA tax with respect towages of the employee spouse would bereported on Form 940, Employer’s AnnualFederal Unemployment Tax Return.

2002–19 I.R.B. 910 May 13, 2002

HOLDINGS

(1) The transfer of interests in non-statutory stock options and nonqualifieddeferred compensat ion from theemployee spouse to the nonemployeespouse incident to divorce does not resultin a payment of wages for FICA andFUTA tax purposes.

The nonstatutory stock options aresubject to FICA and FUTA taxes at thetime of exercise by the nonemployeespouse to the same extent as if the optionshad been retained by the employee spouseand exercised by the employee spouse.The nonqualified deferred compensationalso remains subject to FICA and FUTAtaxes to the same extent as if the rights tothe compensation had been retained bythe employee spouse. To the extent FICAand FUTA taxation apply, the wages arethe wages of the employee spouse. Theemployee portion of the FICA taxes isdeducted from the wages as and when thewages are taken into account for FICAtax purposes.

The income recognized by the nonem-ployee spouse with respect to the exerciseof the nonqualified stock options is sub-ject to withholding under section 3402.The amounts distributed to the nonem-ployee spouse from the nonqualifieddeferred compensation plans are also sub-ject to withholding under section 3402.Pursuant to section 31, the nonemployeespouse is entitled to the credit allowablefor the income tax withheld at the sourceon these wages.

(2) The social security wages, Medi-care wages, social security taxes with-held, and Medicare taxes withheld, ifapplicable, are reportable on a Form W–2with the name, address, and social secu-rity number of the employee spouse.However, no amount is includible in Box1 and Box 2 of the employee’s Form W–2with respect to these payments. Theincome with respect to the exercise of thenonqualified stock option by the nonem-ployee spouse and the distributions fromthe nonqualified deferred compensationplans to the nonemployee spouse arereportable in Box 3 as other income on aForm 1099–MISC with the name,address, and social security number of thenonemployee spouse. Income tax with-holding with respect to these payments of

wages is included in Box 4, Federalincome tax withheld.

Income tax withholding on paymentsto the nonemployee spouse is included ona Form 945 filed by Y. The social securitytax and Medicare tax is reported on Y’sForm 941, and the FUTA tax is reportedon Y’s Form 940.

III. Request for Comments

Comments are requested regarding theproposed FICA, FUTA, income tax with-holding, and reporting obligations withrespect to transfers of interests in non-statutory stock options and nonqualifieddeferred compensation incident todivorce. All comments will be availablefor public inspection and copying. Com-ments must be submitted by July 15,2002. Comments should reference Notice2002–31, and be addressed to:

Associate Chief Counsel(Tax Exempt and Government

Entities)CC:TEGEAttn: Employment Taxation of

Transfers Incident to DivorceRoom 5214Internal Revenue Service1111 Constitution Ave., N.W.Washington, DC 20224

In addition, comments may be submittedelectronically via the Internet by sendingthem in an e-mail to notice.comments@irscounsel.treas.gov and specifying thecomments concern Notice 2002–31.

IV. Proposed Effective Date of ProposedRevenue Ruling

It is proposed that the revenue rulingdescribed above be effective January 1 ofthe calendar year beginning not less than120 days after the publication of the con-clusions proposed in this notice as a rev-enue ruling or other document. For peri-ods before the effective date, it isexpected that the revenue ruling will pro-vide relief to employers for reasonable,good faith interpretations, including theinterpretation in the proposed revenueruling. However, with respect to compen-sation that is transferred to a spouse inci-dent to divorce, it is expected that failure

to treat nonqualified stock option com-pensation, or amounts deferred under anonqualified deferred compensation plan,as subject to FICA will not be considereda reasonable, good faith interpretation.

Drafting Information

The principal author of this notice isA. G. Kelley of the Office of the Associ-ate Chief Counsel (Tax Exempt and Gov-ernment Entities). However, other person-nel from Treasury and the Serviceparticipated in its development. For fur-ther information regarding this notice,contact A. G. Kelley at (202) 622–6040(not a toll-free call).

26 CFR 601.201: Rulings and determination letters(Also, Part I, § 401; § 1.401(a)–2.)

Rev. Proc. 2002–21

SECTION 1. INTRODUCTION

.01 Introduction. This revenue proce-dure describes steps that may be taken toensure the qualified status of defined con-tribution retirement plans maintained byprofessional employer organizations(PEOs) for the benefit of WorksiteEmployees. PEOs are also commonlyknown as employee leasing organizations.

.02 Potential for plan disqualification.The employment relationship betweenworkers and the employer maintaining aplan is fundamental to whether a plan isqualified under § 401(a) of the InternalRevenue Code. The determination ofwhether an employment relationshipexists depends on the facts and circum-stances of each particular case. If a retire-ment plan provides benefits for individu-als who are not employees of theemployer maintaining the plan, the plandoes not satisfy the exclusive benefit rulecontained in § 401(a)(2), and thereforecould be disqualified.

03. Relief from disqualification ofplan. The Service recognizes the com-plexity involved in the determination ofwhether a Worksite Employee is the com-mon law employee of the PEO or the cli-ent organization (CO), as well as the needof the PEO, the CO, Worksite Employees,and plan administrators for certainty inthis area. Accordingly, this revenue proce-dure provides a framework under which

May 13, 2002 911 2002–19 I.R.B.

plans sponsored by PEOs will not betreated as violating the exclusive benefitrule solely because they provide benefitsto Worksite Employees. Under theapproach provided in this revenue proce-dure, a PEO that maintains a defined con-tribution retirement plan may establish amultiple employer plan that benefitsWorksite Employees providing servicesto COs. For PEOs that do not wish toestablish a multiple employer plan, therevenue procedure provides transitionrules under which the existing PEO planwill be treated as a qualified plan if it isterminated by a specified date.

SECTION 2. PURPOSE

.01 In general. The purpose of thisrevenue procedure is to provide reliefwith respect to certain defined contribu-tion retirement plans maintained by aPEO (“PEO Retirement Plans”) that ben-efit Worksite Employees.

.02 Scope of relief. With regard to PEORetirement Plans established prior to May13, 2002, if the requirements of section 5are met, the Service will not disqualifythe PEO Retirement Plan solely onaccount of an exclusive benefit rule vio-lation under § 401(a)(2) for a plan yearbeginning before the Compliance Date ifthat violation results from the PEORetirement Plan benefitting WorksiteEmployees who are not the PEO’semployees. Relief provided under thisrevenue procedure applies only withrespect to the PEO Retirement Plan forwhich relief is granted and not to otherplans maintained by a CO or the PEO.

.03 No effect on other law. The reliefprovided under this revenue procedurewith respect to the provisions of § 401(a)has no effect on the rights of any partyunder any other law, including Title I ofthe Employee Retirement Income Secu-rity Act of 1974 and other provisions ofthe Internal Revenue Code.

SECTION 3. BACKGROUND

.01 In general. An employee leasingarrangement typically involves the inter-action among three parties: the PEO, theCO, and the Worksite Employees. In atypical situation, a PEO enters into anagreement with a CO whereby employeesbecome Worksite Employees and con-tinue to provide services to the CO.

.02 Employment relationship. Theissue of whether a worker is an employeeof a particular entity for employment taxpurposes is determined by reference to§ 3121(d), which incorporates the com-mon law definition of employee. TheSupreme Court has also applied this com-mon law definition of employee for pur-poses of determining whether a worker isan employee entitled to receive benefitsunder a retirement plan. See NationwideMutual Insurance Co. v. Darden, 503U.S. 318 (1992). Courts have also foundthat common law factors are applicable todetermine which of two entities is theemployer for purposes of retirementplans. The critical issue in determiningwho is the employer of an individual iswhich entity has the right to direct andcontrol the individual performing the ser-vices. If it is found that the CO, not thePEO, is the employer, the plan main-tained by a PEO that benefits WorksiteEmployees of the CO would fail to satisfythe exclusive benefit rule. See Profes-sional and Executive Leasing, Inc. v.Commissioner, 89 T.C. 225 (1987), aff’d,862 F.2d 751 (9th Cir. 1988).

.03 Exclusive benefit rule. Section401(a)(2) provides that a trust forming apart of a qualified pension, profit-sharing,or stock bonus plan must be a trust estab-lished and maintained by an employer forthe exclusive benefit of that employer’semployees and their beneficiaries(“exclusive benefit rule”). Therefore, aretirement plan that provides benefits forindividuals who are not employees of theemployer maintaining the plan (and whoare not otherwise treated as employeesunder rules such as those under § 414)violates the exclusive benefit rule anddoes not satisfy the requirements of§ 401(a).

.04 Leased employees. Section 414(n)does not permit PEOs to maintain plansfor Worksite Employees who are not thecommon law employees of the PEO. Sec-tion 414(n) deals with individuals whoare not common law employees of theentity for which they perform services(“recipient”) but who might have to betaken into account in determiningwhether a retirement plan maintained bythe recipient satisfies the requirements of§ 401(a). Notice 84–11 (1984–2 C.B.469) provides questions and answersrelating to § 414(n). Section 414(n)

addresses the relationship between therecipient and the leased workers, but itdoes not apply to situations in which aworker is the common law employee ofthe recipient.

.05 Multiple employer plan. Section413(c) provides rules for the qualificationof a plan maintained by more than oneemployer (i.e., a “multiple employerplan”). Under § 413(c)(2), in determiningwhether a multiple employer plan com-plies with the exclusive benefit rule, allemployees benefitting under the multipleemployer plan are treated as the employ-ees of all employers who maintain theplan. Additionally, an employee’s servicewith all of the employers participating inthe plan is taken into account for pur-poses of vesting under § 411 and planparticipation under § 410(a). See § 413(c)(1) and (3). Similarly, for purposes ofthe contribution and benefit limitations of§ 415, an employee’s compensation fromall employers participating in the plan istaken into account. See § 1.415–1(e)(1)of the Income Tax Regulations. Otherrules apply separately to each participat-ing employer and its employees. Forexample, nondiscrimination testing under§ 401(a)(4) and § 401(k), and coveragetesting under § 410(b), are performedseparately for each employer maintainingthe multiple employer plan. See§ 1.401(a)(4)–1(c)(4), § 1.413–2(a)(3)(ii)and § 1.401(k)–1(g)(11). Top-heavyrequirements under § 416 also applyseparately to each employer. See§ 1.416–1, Q&A G–2.

SECTION 4. RELIEF AVAILABLE

.01 No disqualification of PEO Retire-ment Plan. If a PEO has a PEO Retire-ment Plan in existence on May 13, 2002,that benefits Worksite Employees, section5 provides the PEO with the option ofeither converting the PEO RetirementPlan to a multiple employer plan or termi-nating the plan. If a PEO timely satisfiesthe requirements of section 5, the Servicewill not disqualify its PEO RetirementPlan solely on the grounds that the planviolates or has violated the exclusive ben-efit rule for plan years beginning beforethe Compliance Date by benefittingWorksite Employees who are not thePEO’s employees.

.02 Effective Dates. (1) ComplianceDate. Except as specifically provided, all

2002–19 I.R.B. 912 May 13, 2002

remedial actions and other requirementsin section 5 must be completed by theCompliance Date. The Compliance Dateis the last day of the first plan year of thePEO Retirement Plan beginning on orafter January 1, 2003. For a calendar yearplan, the Compliance Date is December31, 2003.

(2) PEO Decision Date. The PEODecision Date is the date by which thePEO must take specified actions affirm-ing its decision whether to terminate thePEO Retirement Plan or maintain a mul-tiple employer retirement plan that ben-efits Worksite Employees. The PEO Deci-sion Date is the date that is 120 days afterthe first day of the plan year beginning onor after January 1, 2003. For a calendaryear plan, the PEO Decision Date is May2, 2003.

.03 Plan terminations. For the pur-pose of determining whether a PEORetirement Plan or Spinoff RetirementPlan satisfies the qualification require-ments in § 401(a) upon plan termination(as described in section 5.06), WorksiteEmployees may be treated as if they wereemployees of the PEO.

SECTION 5. REMEDIAL ACTIONREQUIRED

.01 In general. In order to obtain therelief provided in section 4, the plansponsor of a PEO Retirement Plan musteither terminate the PEO Retirement Planin accordance with section 5.02, or con-vert the PEO Retirement Plan into a mul-tiple employer plan (“Multiple EmployerRetirement Plan”) in accordance withsection 5.03.

.02 Termination Option. (1) Termina-tion of PEO Retirement Plan. If a PEOchooses to terminate a PEO RetirementPlan in accordance with this section, thePEO must adopt a resolution of its boardof directors (or, if the PEO is not a corpo-ration, it must take comparable bindingaction, such as a partnership vote) on orbefore the PEO Decision Date, providingthat the plan will be terminated on orbefore the Compliance Date. After thedate of termination, all assets in theplan’s related trust must be distributed assoon as administratively feasible. SeeRev. Rul. 89–87 (1989–2 C.B. 81). Con-sequently, the mere discontinuance ofcontributions under the PEO Retirement

Plan is not a termination of the plan andwill not satisfy the requirements of thissection.

(2) Notification of COs. The PEO mustprovide notice of the options set forth insection 5.02(3) to each CO that has Work-site Employees with accrued benefits inthe PEO Retirement Plan. The PEO mustspecify in the notice the date by whicheach CO must notify the PEO of theoption it selects. This notice must be senton or before the PEO Decision Date.

(3) CO Options. The PEO must pro-vide each CO with all of the followingoptions:

(a) Transfer of assets and liabilities toCO plans. The CO may choose to havethe assets and liabilities of the PEO Planthat are attributable to Worksite Employ-ees performing services for the CO trans-ferred to a retirement plan of the CO asprovided in section 5.04(1). The transferof assets and liabilities attributable toWorksite Employees performing servicesfor the CO to the CO’s plan must be com-pleted on or before the Compliance Date.

(b) Spinoff of assets and liabilities to aseparate plan and termination of thatplan. The CO may choose to have theassets and liabilities of the PEO Retire-ment Plan that are attributable to itsWorksite Employees spun off to a SpinoffRetirement Plan, which is then termi-nated, as provided in section 5.04(2). Thespinoff and termination must be com-pleted on or before the Compliance Date.Plan assets must be distributed as soon asadministratively feasible after the plantermination date.

(4) CO Decision and Implementation.The CO must provide notice of theselected option to the PEO by a datespecified by the PEO. If a CO fails totimely inform the PEO of the option itselected, the PEO must treat the CO ashaving selected option 5.02(3)(b) (Spinoffand Termination). The PEO must imple-ment the choice made or deemed made byeach CO on or before the ComplianceDate.

(5) Determination Letter request. ThePEO must request determination letterson the termination of the PEO RetirementPlan and the Spinoff Retirement Plan. Seesection 5.06 of this revenue procedure forfurther information on determination let-ters on plan terminations.

.03 Conversion Option. (1) Conversionto Multiple Employer Retirement Plan. APEO may choose to convert the PEORetirement Plan to a Multiple EmployerRetirement Plan, effective the first day ofthe first plan year beginning after theCompliance Date. If the PEO chooses thisoption, the PEO must satisfy the require-ments of section 5.03(2) through (6). Inaddition, the Multiple Employer Retire-ment Plan must be adopted by those COsthat wish to have Worksite Employeesparticipate in the plan. To the extent thata PEO Retirement Plan is converted intoa Multiple Employer Retirement Plan,assets and liabilities will remain in theplan and not be distributed to participants.

(2) Adoption of Plan Amendments. ThePEO must adopt plan amendments neces-sary to convert the PEO Retirement Planto a Multiple Employer Retirement Planon or before the PEO Decision Date. Theeffective date of the plan amendmentsadopted by the PEO must be no later thanthe first day of the first plan year begin-ning after the Compliance Date.

(3) Notification of COs. The PEO mustprovide notice of the options set forth insection 5.03(4) to each CO that has Work-site Employees with accrued benefits inthe PEO Retirement Plan. The PEO mustspecify in the notice the date by whicheach CO must notify the PEO of theoption it selects. This notice must be senton or before the PEO Decision Date.

(4) CO Options. The PEO must pro-vide each CO with all of the followingoptions:

(a) Adoption of Multiple EmployerRetirement Plan. The CO may adopt theMultiple Employer Retirement Plan. TheCO must adopt the Multiple EmployerRetirement Plan by the first day of thefirst plan year beginning after the Com-pliance Date (or any earlier date as maybe specified by the PEO). If a COchooses this option, the WorksiteEmployees performing services for theCO may participate in the MultipleEmployer Retirement Plan after its adop-tion by the CO without causing the planto fail to satisfy the exclusive benefit rule.If a CO has not adopted the MultipleEmployer Retirement Plan by the firstday of the first plan year beginning afterthe Compliance Date (or any earlier dateas may be specified by the PEO), theMultiple Employer Retirement Plan may

May 13, 2002 913 2002–19 I.R.B.

not accept contributions after the Compli-ance Date on behalf of the WorksiteEmployees performing services for theCO. In that event, the assets and liabilitiesattributable to the COs must be spun offas soon as administratively feasible to aSpinoff Retirement Plan.

(b) Transfer of assets and liabilities toCO plans. The CO may choose to havethe assets and liabilities of the PEORetirement Plan that are attributable to itsWorksite Employees transferred to aretirement plan of the CO as provided insection 5.04(1). The transfer must becompleted on or before the ComplianceDate.

(c) Spinoff of assets and liabilities to aseparate plan and termination of thatplan. The CO may choose to have theassets and liabilities of the PEO Retire-ment Plan that are attributable to itsWorksite Employees spun off to a SpinoffRetirement Plan that is then terminated,as provided for in section 5.04(2). Thespinoff and termination must occur on orbefore the Compliance Date. Plan assetsmust be distributed as soon as administra-tively feasible after the plan terminationdate

(5) CO Decision and Implementation.The CO must provide notice of theselected option to the PEO by a datespecified by the PEO. If a CO fails totimely inform the PEO of the option itselected, the PEO must treat the CO ashaving selected option 5.03(4)(c) (Spinoffof assets and liabilities). The PEO mustimplement the choice made or deemedmade by each CO on or before the Com-pliance Date.

(6) Determination Letter request. ThePEO must request determination letterson the Multiple Employer RetirementPlan and the Spinoff Retirement Plan. Seesection 7.02 of this revenue procedure forfurther information on an application fora determination letter on the qualified sta-tus of a Multiple Employer RetirementPlan. See section 5.06 of this revenueprocedure for further information ondetermination letters on plan termina-tions.

.04 Transfers to CO’s plan or Spinoffof CO’s assets and liabilities. This section5.04 applies if the PEO decides to termi-nate the PEO Retirement Plan; if a COchooses to terminate its participation inthe PEO Retirement Plan and transfer its

attributable assets and liabilities to theCO’s plan; or if a CO’s attributable assetsand liabilities are spun off to a SpinoffRetirement Plan and distributed in con-nection with the termination of theSpinoff Retirement Plan.

(1) Transfers to CO’s plan. (a) Docu-mentation of qualified status of planmaintained by the CO. If a CO chooses totransfer its attributable assets and liabili-ties in a PEO’s Retirement Plan to theCO’s plan, the CO must provide the PEO,on or before a date specified by the PEO,with documentation that the plan to whichassets are transferred is a qualified planestablished and maintained by the CO. Ifsuch documentation is provided, the PEOmust transfer the assets and liabilitiesattributable to the Worksite Employeesfrom the PEO Retirement Plan to theCO’s plan before the Compliance Date. Ifthe CO fails to provide the PEO with thisdocumentation, or any other informationrequired by the PEO to effect transfer, onor before the date specified by the PEO,the PEO must utilize the procedures insection 5.04(2).

(b) Qualified Plan Determination. Forpurposes of determining whether a COmaintains a qualified plan, a “qualifiedplan” is a retirement plan that on orbefore the Compliance Date either (i) hadreceived a favorable determination, notifi-cation, or opinion letter that consideredGUST (GUST is an acronym for the Uru-guay Round Agreements Act (GATT), theUniformed Services Employment andReemployment Rights Act of 1994(USERRA), the Small Business Job Pro-tection Act of 1996 (SBJPA), the Tax-payer Relief Act of 1997 (TRA’97), theInternal Revenue Service Restructuringand Reform Act of 1998 (RRA’98) andthe Community Renewal Tax Relief Actof 2000) or (ii) had submitted a request tothe Service for a determination letter thatconsiders GUST.

(2) Spinoff and termination. If a COchooses a spinoff, or fails to timely notifythe PEO of its selection, the PEO mustimplement a spinoff of the assets andliabilities of the PEO’s Retirement Planthat are attributable to the CO’s WorksiteEmployees to a Spinoff Retirement Plan.The Spinoff Retirement Plan may receiveand hold assets and liabilities attributableto Worksite Employees of all of the COsthat selected the spinoff option or failed

to timely notify the PEO of a selection.The PEO must then terminate the SpinoffRetirement Plan on or before the Compli-ance Date and distribute benefits to theWorksite Employees performing servicesfor the COs as soon as administrativelyfeasible after the termination date. Forpurposes of this revenue procedure, aspinoff means a spinoff of plan assets andliabilities attributable to the WorksiteEmployees performing services for theCOs selecting the spinoff option (or fail-ing to timely select an option) from thePEO Retirement Plan to a Spinoff Retire-ment Plan that satisfies the transferrequirements of § 414(l).

.05 Methods of providing notice. Anynotice required to be provided under thisrevenue procedure may be sent by anymethod, including an electronic medium,that reasonably ensures that the intendedrecipient will receive timely and adequatenotice. For purposes of this revenue pro-cedure, notice sent by United States mailis considered sent as of the date of theUnited States postmark stamped on thecover in which the notice is mailed.

.06 Plan terminations. (1) Request fordetermination letter on plan termination.In choosing any of the options relating toplan terminations, a PEO must request adetermination letter on the plan termina-tion. Section 12 of Rev. Proc. 2002–6(2002–1 I.R.B. 203) explains the proce-dures for requesting determination lettersinvolving qualification of a plan uponplan termination. The permanencyrequirement described in § 1.401–1(b)(2)will not be raised as a disqualifyingdefect for plans being terminated pursu-ant to this revenue procedure. The requestfor a determination letter must be madewithin one year of the date of terminationusing the applicable provisions of Rev.Proc. 2002–6.

(2) Distribution treated as being froma qualified plan. Distributions made toWorksite Employees upon the terminationof the PEO Retirement Plan or SpinoffRetirement Plan in accordance with thissection will not fail to be eligible forfavorable tax treatment accorded distribu-tions from qualified plans (including eli-gibility for tax-free rollovers) solelybecause the plan violated the exclusivebenefit rule of § 401(a)(2).

.07 Example. (i) A PEO maintains aPEO Retirement Plan established in 1994,

2002–19 I.R.B. 914 May 13, 2002

and the PEO uses the calendar year for itsplan year. The PEO Retirement Plantreats all Worksite Employees performingservices for COs as employees of thePEO. There are 75 COs with WorksiteEmployees benefiting under the PEORetirement Plan.

(ii) After reviewing the options setforth in section 5, the PEO decides toconvert the PEO Retirement Plan to aMultiple Employer Retirement Plan. Inaccordance with the requirements of sec-tion 5.03, on January 31, 2003, the PEOadopts amendments to the PEO Retire-ment Plan converting the plan to a Mul-tiple Employer Retirement Plan, effectiveJanuary 1, 2004. On February 14, 2003,the PEO mails notification to each COthat it has decided to convert the PEORetirement Plan to a Multiple EmployerRetirement Plan and explains the optionsavailable to the CO as described in sec-tion 5.03(4). In its letter to the COs, thePEO explains that each CO has untilAugust 15, 2003, to notify the PEO, inwriting, of its choice. The letter explainsthat if the CO does not notify the PEO ofits selected option on or before August15, 2003, the PEO will treat the CO ashaving selected the spinoff and termina-tion option. The letter further explainsthat if a CO elects to adopt the MultipleEmployer Retirement Plan, the Plan mustbe adopted on or before December 1,2003.

(iii) By August 15, 2003, fifty of theCOs with Worksite Employees benefittingunder the PEO Retirement Plan notify thePEO of their decision to adopt and main-tain the Multiple Employer RetirementPlan for the Worksite Employees. ByDecember 1, 2003, forty-nine of the fiftyCOs adopted the Multiple EmployerRetirement Plan, effective January 1,2004. In accordance with section5.03(4)(a) of this revenue procedure, onDecember 10, 2003, the PEO spins offthe assets and liabilities attributable to theone CO that did not timely adopt theMultiple Employer Retirement Plan to aSpinoff Retirement Plan.

(iv) Ten COs timely elect a transfer, inwhich the assets and liabilities attribut-able to each CO’s Worksite Employeesare transferred to a qualified retirementplan established and maintained by eachCO, and that satisfy the requirements

described in section 5.04(1). The ten COstimely provide all information required toeffect the transfer, including documenta-tion of the plans’ qualified status. Thetransfers to each of the CO plans arecompleted by December 31, 2003.

(v) Ten COs affirmatively elect thespinoff and termination option. The PEOspins off plan assets and liabilities attrib-utable to the Worksite Employees per-forming services for those COs to theSpinoff Retirement Plan on December 10,2003.

(vi) The remaining five COs failed tonotify the PEO of their choice by August15, 2003. Therefore, in accordance withrequirements in section 5.03(5), each ofthose COs is treated as having selectedthe spinoff and termination option as itschoice. The PEO spins off the assets andliabilities of these COs to the SpinoffRetirement Plan on December 10, 2003.

(vii) On December 11, 2003, the PEOterminates the Spinoff Retirement Plan.On February 5, 2004, the PEO submits anapplication for a determination letter onthe termination of the Spinoff RetirementPlan. The PEO receives a favorable deter-mination letter on the termination of theplan. As soon as administratively feasiblefollowing the termination, distributionsare made to the Worksite Employees per-forming services for the sixteen COs (theone CO that failed to timely adopt theMultiple Employer Retirement Plan, theten COs that selected the spinoff and ter-mination option, and the five COs thatfailed to timely notify the PEO of theirchoice) with assets in the Spinoff Retire-ment Plan.

(viii) On February 5, 2004, the PEOsubmits an application for a determina-tion letter on the qualified status of theMultiple Employer Retirement Plan, andsubsequently receives such a determina-tion letter from the Service. Because thePEO took all of the steps required in sec-tion 5 of the revenue procedure, the PEORetirement Plan is entitled to the relief setforth in section 4 of the revenue proce-dure.

.08 PEOs not electing to take advan-tage of relief under this revenue proce-dure. If a PEO does not, as of the Com-pliance Date, either terminate the PEORetirement Plan it maintains for WorksiteEmployees performing services for COs

(as provided for in section 5.02) or con-vert the PEO Retirement Plan to a Mul-tiple Employer Retirement Plan (as pro-vided for in section 5.03), the relief inthis revenue procedure is not available forany violations of the qualificationrequirements, including violations of theexclusive benefit rule, by PEO Retire-ment Plan.

.09 No Reliance on Determination Let-ters for PEO Retirement Plans. After theCompliance Date, a PEO may not rely ona determination letter for a PEO Retire-ment Plan that benefits Worksite Employ-ees performing services for COs, regard-less of when the determination letter wasissued.

SECTION 6. DEFINITIONS

.01 PEO Retirement Plan. The term“PEO Retirement Plan” means a definedcontribution plan (including a plan thatincludes a cash or deferred arrangementdescribed in § 401(k)) intended to satisfythe requirements of § 401(a) or § 403(a). The definition of a PEO RetirementPlan does not include a plan maintainedas a multiple employer plan that has beenadopted by a PEO and one or more COs.

.02 Multiple Employer RetirementPlan. The term “Multiple EmployerRetirement Plan” means a defined contri-bution plan (including a plan that includesa cash or deferred arrangement describedin § 401(k)) intended to satisfy therequirements of § 401(a) or § 403(a), and§ 413(c), under which each CO is treatedas an employer.

.03 Spinoff Retirement Plan. The term“Spinoff Retirement Plan” means a sepa-rate plan established by a PEO for thespecific purpose of a spinoff and termina-tion as provided for in section 5.04(2).

.04 Worksite Employees. The term“Worksite Employees” means employeeswho receive amounts from a PEO for pro-viding services to a CO pursuant to a ser-vice agreement between the PEO and theCO.

.05 Client Organization. The term“Client Organization” (CO) means anorganization that enters into a serviceagreement with a PEO under whichWorksite Employees provide services tothe organization.

May 13, 2002 915 2002–19 I.R.B.

SECTION 7. PROCEDURES ANDTRANSITIONAL RULE

.01 Other qualification issues. (1) Useof EPCRS. Plan qualification issues, otherthan the exclusive benefit issue for whichrelief is provided under this revenue pro-cedure, may be resolved under theEmployee Plans Compliance ResolutionSystem (EPCRS). See Rev. Proc.2001–17 (2001–1 C.B. 589).

(2) Transitional relief for PEOs. Forpurposes of determining whether a retire-ment plan maintained by a PEO for thebenefit of Worksite Employees of COssatisfies the requirements of § 401(a)(2)prior to the Compliance Date, a PEO maytreat Worksite Employees as its employ-ees.

(3) Transitional Rule for Code section416. For purposes of determining whetherthe Multiple Employer Retirement Plan istop heavy (as defined in § 416(g)(1)(A)(ii)) in its first plan year, the deter-mination date with respect to the firstplan year of such plan shall be the lastday of such plan year. See § 416(g)(4)(C)(ii).

.02 Determination letters. (1) Determi-nation letter application. Any applicationfor a determination letter on the qualifiedstatus of any Multiple Employer Retire-ment Plan adopted and maintained byPEOs and COs that are seeking reliefunder this revenue procedure shall bemade under the relevant provisions ofRev. Proc. 2002–6.

(2) Time of disqualification provision.For purposes of § 1.401(b)–1(b) the Ser-vice will treat the requirement that thePEO adopt a Multiple Employer Retire-ment Plan by the Compliance Date as adisqualifying provision.

.03 Pending examinations no bar torelief. A PEO Retirement Plan underexamination by the Service is eligible forthe relief provided by this revenue proce-dure.

SECTION 8. EFFECT ON OTHERDOCUMENTS

Rev. Proc. 2002–6 is modified.

SECTION 9. EFFECTIVE DATE

This revenue procedure is effective onMay 13, 2002.

DRAFTING INFORMATION

The principal author of this revenueprocedure is Jeanne Royal Singley of theEmployee Plans, Tax Exempt and Gov-ernment Entities Division. For furtherinformation regarding this revenue proce-dure, please contact the Employee Planstaxpayer assistance telephone service at1–877–829–5500 (a toll-free number),between the hours of 8:00 a.m. and 6:30p.m. Eastern time, Monday through Fri-day. Ms. Singley may be reached at1–202–283–9888 (not a toll-free number).

26 CFR 1.148–10: Anti-abuse rules and Authority ofCommissioner.(Also Part I, §§ 103, 148, 1.148–1, 148–2, 148–6)

Rev. Proc. 2002–31

SECTION 1. PURPOSE

This final revenue procedure sets fortha safe harbor under which an issue of taxor revenue anticipation bonds will not betreated as outstanding longer than is rea-sonably necessary to accomplish the gov-ernmental purposes of the bonds for pur-poses of § 1.148–10(a)(4) of the IncomeTax Regulations. On August 20, 2001,this revenue procedure was published inproposed form as Notice 2001–49(2001–34 I.R.B. 188). Public commentswere invited concerning the proposedrevenue procedure and none werereceived. This final revenue procedure isunchanged from the proposed revenueprocedure.

SECTION 2. BACKGROUND

01. Section 103(a) of the Internal Rev-enue Code of 1986 provides that, exceptas provided in section 103(b), grossincome does not include interest on anystate or local bond.

02. Section 103(b) provides that theexclusion described in section 103(a)does not apply to any arbitrage bond.

03. Section 148(a) provides that anarbitrage bond is any bond issued as part

of an issue any portion of the proceeds ofwhich are to be used directly orindirectly—

(1) to acquire higher yielding invest-ments, or

(2) to replace funds which were useddirectly or indirectly to acquirehigher yielding investments.

04. Section 148(c)(1) provides that abond will not be treated as an arbitragebond solely by reason of the fact that theproceeds of the issue of which such bondis a part may be invested in higher yield-ing investments for a reasonable tempo-rary period until such proceeds areneeded for the purpose for which suchissue was issued.

05. Section 1.148–2(e)(3)(i) of theIncome Tax Regulations provides that theproceeds of an issue that are reasonablyexpected to be allocated to restrictedworking capital expenditures within 13months after the issue date qualify for atemporary period of 13 months beginningon the issue date.

06. Section 1.148–2(e)(3)(ii) providesthat if an issuer reasonably expects to usetax revenues arising from tax levies for asingle fiscal year to redeem or retire anissue, and the issue matures by the earlierof 2 years after the issue date or 60 daysafter the last date for payment of thosetaxes without interest or penalty, the tem-porary period under § 1.148–2(e)(3)(i) isextended until the maturity date of theissue.

07. Section 1.148–1(b) provides thatrestricted working capital expendituresare working capital expenditures that aresubject to the proceeds-spent-last rule in§ 1.148–6(d)(3)(i) and are ineligible forany exception to that rule.

08. Section 1.148–10(a)(1) providesthat bonds of an issue are arbitrage bondsif an abusive arbitrage device under§ 1.148–10(a)(2) is used in connectionwith the issue.

09. Section 1.148–10(a)(2) providesthat any action is an abusive arbitragedevice if the action has the effect of (i)enabling the issuer to exploit the differ-ence between tax-exempt and taxableinterest rates to obtain a material financialadvantage and (ii) overburdening the tax-exempt bond market.

10. Section 1.148–10(a)(4) providesthat an action overburdens the tax-exemptbond market if it results in issuing more

2002–19 I.R.B. 916 May 13, 2002

bonds, issuing bonds earlier, or allowingbonds to remain outstanding longer thanis otherwise reasonably necessary toaccomplish the governmental purposes ofthe bonds, based on all the facts and cir-cumstances.

11. Under § 1.148–10(a)(4), one factorevidencing that bonds may remain out-standing longer than necessary is a termthat exceeds the safe harbors against thecreation of replacement proceeds under§ 1.148–1(c)(4)(i)(B). This factor may beoutweighed by other factors, however,such as long-term financial distress.

12. Section 1.148–1(c)(4)(i)(A) pro-vides that certain replacement proceedsarise to the extent that the issuer reason-ably expects as of the issue date that theterm of the issue will be longer than isreasonably necessary for the governmen-tal purposes of the issue and that therewill be available amounts during theperiod that the issue remains outstandinglonger than necessary. Whether an issue isoutstanding longer than necessary isdetermined under § 1.148–10.

13. Section 1.148–1(c)(4)(i)(B)(1) pro-vides a safe harbor against the creation ofreplacement proceeds under § 1.148–1(c)(4)(i)(A) for the portion of an issuethat finances restricted working capitalexpenditures. This safe harbor is met ifthat portion is not outstanding longer than2 years.

14. Section 1.148–1(c)(4)(i)(B)(2) pro-vides a safe harbor against the creation of

replacement proceeds under § 1.148–1(c)(4)(i)(A) for the portion of an issue(including a refunding issue) that financesor refinances capital projects. This safeharbor is met if that portion has aweighted average maturity that does notexceed 120 percent of the average reason-ably expected economic life of thefinanced capital projects.

15. Section 1.148–10(d) containsexamples illustrating the application ofthe anti-abuse rules of § 1.148–10.Example 2(i) describes a particular trans-action in which an issue is deemed tohave a longer weighted average maturitythan necessary, notwithstanding that theissue satisfies the safe harbor against thecreation of replacement proceeds in§ 1.148–1(c)(4)(i)(B)(2).

SECTION 3. SCOPE

This revenue procedure applies to anissue of tax or revenue anticipation bondsthe proceeds of which qualify for a tem-porary period for restricted working capi-tal expenditures under § 1.148–2(e)(3).

SECTION 4. SAFE HARBOR

For purposes of § 1.148–10(a)(4), anissue of tax or revenue anticipation bondswithin the scope of this revenue proce-dure will not be treated as outstandinglonger than is reasonably necessary toaccomplish the governmental purposes ofthose bonds if the final maturity date of

the issue is not later than the end of theapplicable temporary period under§ 1.148–2(e)(3)(i) or § 1.148–2(e)(3)(ii)for which proceeds of the issue qualify.This revenue procedure does not apply todetermine whether an issue of tax or rev-enue anticipation bonds meets the otherrequirements of section 148.

SECTION 5. ADVANCE RULINGS

The Service will consider requests forrulings on proposed issues of tax or rev-enue anticipation bonds that do not satisfythe safe harbor provided in section 4.

SECTION 6. EFFECTIVE DATE

This revenue procedure applies to taxor revenue anticipation bonds sold afterMay 13, 2002.

DRAFTING INFORMATION

The principal authors of this revenueprocedure are Rose M. Weber and Timo-thy L. Jones of the Office of the DivisionCounsel/Associate Chief Counsel (TaxExempt and Government Entities). How-ever, other personnel from the IRS andTreasury Department participated in thedevelopment of this revenue procedure.For further information regarding thisrevenue procedure, contact Rose M.Weber or Timothy L. Jones at (202) 622–3980 (not a toll-free call).

May 13, 2002 917 2002–19 I.R.B.

Part IV. Items of General Interest

Notice of ProposedRulemaking by Cross-Reference to TemporaryRegulations

Required Distributions FromRetirement Plans

REG–108697–02

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Notice of proposed rulemakingby cross-reference to temporary regula-tions.

SUMMARY: In the Rules and Regula-tions section of the Federal Register, theIRS is issuing temporary regulations(T.D. 8987 on page 852 of this Bulletin)that provide guidance concerningrequired minimum distributions fordefined benefit plans and annuity con-tracts providing benefits under qualifiedplans, individual retirement plans, andsection 403(b) contracts. The regulationswill provide the public with guidancenecessary to comply with the law and willaffect administrators of, participants in,and beneficiaries of qualified plans; insti-tutions that sponsor and individuals whoadminister individual retirement plans,individuals who use individual retirementplans for retirement income, and benefi-ciaries of individual retirement plans; andemployees for whom amounts are con-tributed to section 403(b) annuity con-tracts, custodial accounts, or retirementincome accounts and beneficiaries ofsuch contracts and accounts. The text ofthose temporary regulations also serves asthe text of these proposed regulations.

DATES: Written or electronic commentsmust be received by July 16, 2002.

ADDRESSES: Send submissions to:CC:ITA:RU (REG–108697–02), room5226, Internal Revenue Service, POB7604, Ben Franklin Station, Washington,DC 20044. Submissions may be handdelivered Monday through Fridaybetween the hours of 8 a.m. and 5 p.m.to: CC:ITA:RU (REG–108697–02), Cou-rier’s Desk, Internal Revenue Service,

1111 Constitution Avenue, NW, Washing-ton, DC. Alternatively, taxpayers maysubmit comments electronically directlyto the IRS Internet site at http://www.irs.gov/regs.

FOR FURTHER INFORMATION CON-TACT: Cathy Vohs at 622–6090

SUPPLEMENTARY INFORMATION:

Background

Final and Temporary regulations in theRules and Regulations portion of the Fed-eral Register amend the Income TaxRegulations (26 CFR part 1) relating tosection 401(a)(9). The temporary regula-tions (§ 1.401(a)(9)–6T) contain rulesrelating to minimum distribution require-ments for defined benefit plans and annu-ity contracts purchased with an employ-ee’s account balance under a definedcontribution plan. The text of those tem-porary regulations also serves as the textof these proposed regulations. The pre-amble to the temporary regulationsexplains the temporary regulations.

Special Analyses

It has been determined that this noticeof proposed rulemaking is not a signifi-cant regulatory action as defined inExecutive Order 12866. Therefore, aregulatory assessment is not required. Italso has been determined that section553(b) of the Administrative ProcedureAct (5 U.S.C. chapter 5) does not apply tothese regulations. Because § 1.401(a)(9)–6 imposes no new collection of infor-mation on small entities, a RegulatoryFlexibility Analysis under the RegulatoryFlexibility Act (5 U.S.C. chapter 6) is notrequired. Pursuant to section 7805(f) ofthe Internal Revenue Code, this notice ofproposed rulemaking will be submitted tothe Chief Counsel for Advocacy of theSmall Business Administration for com-ment on its impact on small business.

Comments and Requests for a PublicHearing

Before these proposed regulations areadopted as final regulations, considerationwill be given to any written comments (a

signed original and eight (8) copies) thatare submitted timely to the IRS. All com-ments will be available for public inspec-tion and copying.

A public hearing may be scheduled ifrequested in writing by a person thattimely submits written comments. If apublic hearing is scheduled, notice of thedate, time, and place for the hearing willbe published in the Federal Register.

Drafting Information

The principal authors of these regula-tions are Marjorie Hoffman and Cathy A.Vohs of the Office of the DivisionCounsel/Associate Chief Counsel (TaxExempt and Government Entities). How-ever, other personnel from the IRS andTreasury participated in their develop-ment.

* * * * *

Proposed Amendments to theRegulations

Accordingly, 26 CFR part 1 is pro-posed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 is amended by an entry in numeri-cal order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

§ 1.401(a)(9)–6 is also issued under 26U.S.C. 401(a)(9). * * *

Par. 2. Section 1.401(a)(9)–6 is addedto read as follows:

§ 1.401(a)(9)–6 Required minimum distri-butions from defined benefit plans.

[The text of proposed § 1.401(a)(9)–6is the same as the text of § 1.401(a)(9)–6T published elsewhere in thisissue of the Federal Register].

Robert E. Wenzel,Deputy Commissioner of

Internal Revenue.

(Filed by the Office of the Federal Register on April16, 2002, 8:45 a.m., and published in the issue ofthe Federal Register for April 17, 2002, 67 F.R.18834)

2002–19 I.R.B. 918 May 13, 2002

Extended Period for Use ofCertain Forms

Announcement 2002–49

In Rev. Proc. 2002–10 (2002–4 I.R.B.401), the Service provided that existingmodel IRAs, SEPs, and SIMPLE IRAplans may not be used after June 1, 2002,to establish new IRAs, SEPs, or SIMPLEIRA plans. In response to comments, theService is extending the June 1 deadlineto October 1, 2002. Thus, a financialinstitution may use an existing modelIRA to establish a new IRA for a cus-tomer through October 1, 2002. Similarly,an employer may use an existing modelSEP or SIMPLE IRA plan to establishsuch a plan through October 1, 2002. Thedeadlines by which revised model formsmust be adopted under Rev. Proc.2002–10 are unchanged.

Filing of Form 8851,Summary of Archer MSAs,Extended to Calendar Year2002

Announcement 2002–52

General

As a result of the Job Creation andWorker Assistance Act of 2002, PublicLaw 107–147, the filing of Form 8851,Summary of Archer MSAs, was extendedinto calendar year 2002.

01. The most current electronic/magnetic filing procedures are found inRevenue Procedure 2001–31, printed inInternal Revenue Bulletin 2001–20, datedMay 14, 2001.

02. The due date for filing paperreturns with IRS also applies to electronicand magnetic media filing. File Form8851, postmarked no later than August 1,2002, to report the number of ArcherMSAs you established from January 1through June 30, 2002.

03. All correspondence, paper formsand media relating to Form 8851 shouldbe sent to:

IRS-Martinsburg Computing CenterInformation Reporting ProgramAttn: 8851 Coordinator240 Murall DriveKearneysville, WV 25430

.04 A list of the acceptable media andmethods of filing Form 8851 are as fol-lows:

- Electronic Filing — FIRE System- Magnetic Tape- Tape Cartridge- 8mm, 4mm, and Quarter Inch Car-

tridges (QIC)- 3 ½-Inch Diskette

☞ Note: Beginning in January 2003,IRS/MCC will no longer accept 9–trackmagnetic tape for the filing of Form8851. Beginning in January 2004, 8mm,4mm, or Quarter Inch Cartridges(QIC) will no longer be acceptable.

.05 The Information Reporting Pro-gram (IRP) Call Site was reorganized andis now the IRP Customer Service Section.The IRP Customer Service Section con-tinues to assist filers via a toll-free num-ber and e-mail with information returnissues. The new toll-free number is866–455–7438. The toll-free number canonly be used within the United States.Filers may continue to use the originaltelephone number, 304–263–8700 orTTY/TDD 304–267–3367 (not toll-free).E-mail may be sent to mccirp@irs.gov.Hours of operation are Monday throughFriday, 8:30 a.m. to 4:30 p.m., Easterntime.

May 13, 2002 919 2002–19 I.R.B.

Definition of TermsRevenue rulings and revenue procedures(hereinafter referred to as“rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe theeffect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position isbeing extended to apply to a variation ofthe fact situation set forth therein. Thus, ifan earlier ruling held that a principleapplied to A, and the new ruling holdsthat the same principle also applies to B,the earlier ruling is amplified. (Comparewith modified, below).

Clarified is used in those instanceswhere the language in a prior ruling isbeing made clear because the languagehas caused, or may cause, some confu-sion. It is not used where a position in aprior ruling is being changed.

Distinguished describes a situationwhere a ruling mentions a previouslypublished ruling and points out an essen-tial difference between them.

Modified is used where the substanceof a previously published position isbeing changed. Thus, if a prior rulingheld that a principle applied to A but notto B, and the new ruling holds that it

applies to both A and B, the prior rulingis modified because it corrects a pub-lished position. (Compare with amplifiedand clarified, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly usedin a ruling that lists previously publishedrulings that are obsoleted because ofchanges in law or regulations. A rulingmay also be obsoleted because the sub-stance has been included in regulationssubsequently adopted.

Revoked describes situations where theposition in the previously published rul-ing is not correct and the correct positionis being stated in the new ruling.

Superseded describes a situation wherethe new ruling does nothing more thanrestate the substance and situation of apreviously published ruling (or rulings).Thus, the term is used to republish underthe 1986 Code and regulations the sameposition published under the 1939 Codeand regulations. The term is also usedwhen it is desired to republish in a singleruling a series of situations, names, etc.,that were previously published over aperiod of time in separate rulings. If the

new ruling does more than restate thesubstance of a prior ruling, a combinationof terms is used. For example, modifiedand superseded describes a situationwhere the substance of a previously pub-lished ruling is being changed in part andis continued without change in part and itis desired to restate the valid portion ofthe previously published ruling in a newruling that is self contained. In this case,the previously published ruling is firstmodified and then, as modified, is super-seded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling and thatlist is expanded by adding further namesin subsequent rulings. After the originalruling has been supplemented severaltimes, a new ruling may be published thatincludes the list in the original ruling andthe additions, and supersedes all prior rul-ings in the series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome ofcases in litigation, or the outcome of aService study.

AbbreviationsThe following abbreviations in currentuse and formerly used will appear inmaterial published in the Bulletin.

A—Individual.Acq.—Acquiescence.B—Individual.BE—Beneficiary.BK—Bank.B.T.A.—Board of Tax Appeals.C—Individual.C.B.—Cumulative Bulletin.CFR—Code of Federal Regulations.CI—City.COOP—Cooperative.Ct.D.—Court Decision.CY—County.D—Decedent.DC—Dummy Corporation.DE—Donee.Del. Order—Delegation Order.DISC—Domestic International Sales Corporation.DR—Donor.E—Estate.EE—Employee.

E.O.—Executive Order.ER—Employer.ERISA—Employee Retirement Income Security Act.EX—Executor.F—Fiduciary.FC—Foreign Country.FICA—Federal Insurance Contributions Act.FISC—Foreign International Sales Company.FPH—Foreign Personal Holding Company.F.R.—Federal Register.FUTA—Federal Unemployment Tax Act.FX—Foreign Corporation.G.C.M.—Chief Counsel’s Memorandum.GE—Grantee.GP—General Partner.GR—Grantor.IC—Insurance Company.I.R.B.—Intemal Revenue Bulletin.LE—Lessee.LP—Limited Partner.LR—Lessor.M—Minor.Nonacq.—Nonacquiescence.O—Organization.P—Parent Corporation.PHC—Personal Holding Company.

PO—Possession of the U.S.PR—Partner.PRS—Partnership.PTE—Prohibited Transaction Exemption.Pub. L.—Public Law.REIT—Real Estate Investment Trust.Rev. Proc—Revenue Procedure.Rev. Rul.—Revenue Ruling.S—Subsidiary.S.P.R.—Statements of Procedural Rules.Stat.—Statutes at Large.T—Target Corporation.T.C.—Tax Court.T.D.—Treasury Decision.TFE—Transferee.TFR—Transferor.T.I.R.—Technical Information Release.TP—Taxpayer.TR—Trust.TT—Trustee.U.S.C.—United States Code.X—Corporation.Y—Corporation.Z—Corporation.

2002–19 I.R.B. i May 13, 2002

Numerical Finding List1

Bulletins 2002–1 through 2002–18

Announcements:

2002–1, 2002–2 I.R.B. 3042002–2, 2002–2 I.R.B. 3042002–3, 2002–2 I.R.B. 3052002–4, 2002–2 I.R.B. 3062002–5, 2002–4 I.R.B. 4202002–6, 2002–5 I.R.B. 4582002–7, 2002–5 I.R.B. 4592002–8, 2002–6 I.R.B. 4942002–9, 2002–7 I.R.B. 5362002–10, 2002–7 I.R.B. 5392002–11, 2002–6 I.R.B. 4942002–12, 2002–8 I.R.B. 5532002–13, 2002–7 I.R.B. 5402002–14, 2002–7 I.R.B. 5402002–15, 2002–7 I.R.B. 5402002–16, 2002–7 I.R.B. 5412002–17, 2002–8 I.R.B. 5612002–18, 2002–10 I.R.B. 6212002–19, 2002–8 I.R.B. 5612002–20, 2002–8 I.R.B. 5612002–21, 2002–8 I.R.B. 5622002–22, 2002–8 I.R.B. 5622002–23, 2002–8 I.R.B. 5632002–24, 2002–9 I.R.B. 6062002–25, 2002–10 I.R.B. 6212002–26, 2002–11 I.R.B. 6292002–27, 2002–11 I.R.B. 6292002–28, 2002–11 I.R.B. 6302002–29, 2002–11 I.R.B. 6312002–30, 2002–11 I.R.B. 6322002–31, 2002–15 I.R.B. 7472002–32, 2002–12 I.R.B. 6642002–33, 2002–12 I.R.B. 6662002–34, 2002–13 I.R.B. 7022002–35, 2002–12 I.R.B. 6672002–36, 2002–13 I.R.B. 7032002–37, 2002–13 I.R.B. 7032002–38, 2002–14 I.R.B. 7382002–39, 2002–14 I.R.B. 7382002–40, 2002–15 I.R.B. 7472002–41, 2002–14 I.R.B. 7392002–42, 2002–14 I.R.B. 7392002–43, 2002–16 I.R.B. 7922002–44, 2002–17 I.R.B. 8092002–45, 2002–18 I.R.B. 8332002–46, 2002–18 I.R.B. 8342002–47, 2002–18 I.R.B. 8442002–48, 2002–17 I.R.B. 8092002–50, 2002–18 I.R.B. 845

Court Decisions:

2073, 2002–14 I.R.B. 718

Notices:

2002–1, 2002–2 I.R.B. 2832002–2, 2002–2 I.R.B. 285

Notices:—Continued

2002–3, 2002–2 I.R.B. 2892002–4, 2002–2 I.R.B. 2982002–5, 2002–3 I.R.B. 3202002–6, 2002–3 I.R.B. 3262002–7, 2002–6 I.R.B. 4892002–8, 2002–4 I.R.B. 3982002–9, 2002–5 I.R.B. 4502002–10, 2002–6 I.R.B. 4902002–11, 2002–7 I.R.B. 5262002–12, 2002–7 I.R.B. 5262002–13, 2002–8 I.R.B. 5472002–14, 2002–8 I.R.B. 5482002–15, 2002–8 I.R.B. 5482002–16, 2002–9 I.R.B. 5672002–17, 2002–9 I.R.B. 5672002–18, 2002–12 I.R.B. 6442002–19, 2002–10 I.R.B. 6192002–20, 2002–17 I.R.B. 7962002–21, 2002–14 I.R.B. 7302002–22, 2002–14 I.R.B. 7312002–23, 2002–15 I.R.B. 7422002–24, 2002–16 I.R.B. 7852002–25, 2002–15 I.R.B. 7432002–26, 2002–15 I.R.B. 7432002–27, 2002–18 I.R.B. 8142002–28, 2002–16 I.R.B. 7852002–29, 2002–17 I.R.B. 7972002–30, 2002–17 I.R.B. 797

Proposed Regulations:

REG–209135–88, 2002–4 I.R.B. 418REG–209114–90, 2002–9 I.R.B. 576REG–104762–00, 2002–18 I.R.B. 825REG–105369–00, 2002–18 I.R.B. 828REG–107100–00, 2002–7 I.R.B. 529REG–107366–00, 2002–12 I.R.B. 645REG–118861–00, 2002–12 I.R.B. 651REG–105344–01, 2002–2 I.R.B. 302REG–112991–01, 2002–4 I.R.B. 404REG–115054–01, 2002–7 I.R.B. 530REG–119436–01, 2002–3 I.R.B. 377REG–120135–01, 2002–8 I.R.B. 552REG–125450–01, 2002–5 I.R.B. 457REG–125626–01, 2002–9 I.R.B. 604REG–142299–01, 2002–4 I.R.B. 418REG–159079–01, 2002–6 I.R.B. 493REG–165706–01, 2002–16 I.R.B. 787REG–167648–01, 2002–16 I.R.B. 790REG–102740–02, 2002–13 I.R.B. 701

Revenue Procedures:

2002–1, 2002–1 I.R.B. 12002–2, 2002–1 I.R.B. 822002–3, 2002–1 I.R.B. 1172002–4, 2002–1 I.R.B. 1272002–5, 2002–1 I.R.B. 1732002–6, 2002–1 I.R.B. 2032002–7, 2002–1 I.R.B. 2492002–8, 2002–1 I.R.B. 2522002–9, 2002–3 I.R.B. 327

Revenue Procedures—Continued:

2002–10, 2002–4 I.R.B. 4012002–11, 2002–7 I.R.B. 5262002–12, 2002–3 I.R.B. 3742002–13, 2002–8 I.R.B. 5492002–14, 2002–5 I.R.B. 4502002–15, 2002–6 I.R.B. 4902002–16, 2002–9 I.R.B. 5722002–17, 2002–13 I.R.B. 6762002–18, 2002–13 I.R.B. 6782002–19, 2002–13 I.R.B. 6962002–20, 2002–14 I.R.B. 7322002–22, 2002–14 I.R.B. 7332002–23, 2002–15 I.R.B. 7442002–24, 2002–17 I.R.B. 7982002–25, 2002–17 I.R.B. 8002002–26, 2002–15 I.R.B. 7462002–27, 2002–17 I.R.B. 8022002–28, 2002–18 I.R.B. 815

Revenue Rulings:2002–1, 2002–2 I.R.B. 2682002–2, 2002–2 I.R.B. 2712002–3, 2002–3 I.R.B. 3162002–4, 2002–4 I.R.B. 3892002–5, 2002–6 I.R.B. 4612002–6, 2002–6 I.R.B. 4602002–7, 2002–8 I.R.B. 5432002–8, 2002–9 I.R.B. 5642002–9, 2002–10 I.R.B. 6142002–10, 2002–10 I.R.B. 6162002–11, 2002–10 I.R.B. 6082002–12, 2002–11 I.R.B. 6242002–13, 2002–12 I.R.B. 6372002–14, 2002–12 I.R.B. 6362002–15, 2002–13 I.R.B. 6682002–16, 2002–15 I.R.B. 7402002–17, 2002–14 I.R.B. 7162002–18, 2002–16 I.R.B. 7792002–19, 2002–16 I.R.B. 7782002–20, 2002–17 I.R.B. 7942002–21, 2002–17 I.R.B. 7932002–23, 2002–18 I.R.B. 811

Tax Conventions:

2002–14 I.R.B. 725

Treasury Decisions:

8968, 2002–2 I.R.B. 2748969, 2002–2 I.R.B. 2768970, 2002–2 I.R.B. 2818971, 2002–3 I.R.B. 3088972, 2002–5 I.R.B. 4438973, 2002–4 I.R.B. 3918974, 2002–3 I.R.B. 3188975, 2002–4 I.R.B. 3798976, 2002–5 I.R.B. 4218977, 2002–6 I.R.B. 4638978, 2002–7 I.R.B. 500

1 A cumulative list of all revenue rulings, revenue

procedures, Treasury decisions, etc., published in

Internal Revenue Bulletins 2001–27 through 2001–53 is

in Internal Revenue Bulletin 2002–1, dated January 7, 2002.

May 13, 2002 ii 2002–19 I.R.B.

Treasury Decisions:—Continued

8979, 2002–6 I.R.B. 4668980, 2002–6 I.R.B. 4778981, 2002–7 I.R.B. 4968982, 2002–8 I.R.B. 5448983, 2002–9 I.R.B. 5658984, 2002–13 I.R.B. 6688985, 2002–14 I.R.B. 7078986, 2002–16 I.R.B. 780

2002–19 I.R.B. iii May 13, 2002

Finding List of Current Actionson Previously Published Items2

Bulletins 2002–1 through 2002–18

Announcements:

2001–83Modified byAnn. 2002–36, 2002–13 I.R.B. 703

2002–9Corrected byAnn. 2002–30, 2002–11 I.R.B. 632Ann. 2002–35, 2002–12 I.R.B. 667

Notices:

90–24Modified and superseded byNotice 2002–24, 2002–16 I.R.B. 785

98–31Supplemented byAnn. 2002–37, 2002–13 I.R.B. 703

98–43Modified and superseded byNotice 2002–5, 2002–3 I.R.B. 320

2000–11Obsoleted byNotice 2002–3, 2002–2 I.R.B. 289

2001–10Revoked byNotice 2002–8, 2002–4 I.R.B. 398

2001–61Supplemented byNotice 2002–15, 2002–8 I.R.B. 548

2001–68Supplemented byNotice 2002–15, 2002–8 I.R.B. 548

2002–14Modified and superseded byRev. Proc. 2002–28, 2002–18 I.R.B. 815

Proposed Regulations:

REG–209135–88Corrected byAnn. 2002–15, 2002–7 I.R.B. 540Ann. 2002–30, 2002–11 I.R.B. 632

REG–251502–96Withdrawn byAnn. 2002–33, 2002–12 I.R.B. 666

REG–113526–98Withdrawn byREG–105369–00, 2002–18 I.R.B. 828

Proposed Regulations:—Continued

REG–107100–00Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–105344–01Corrected byAnn. 2002–7, 2002–5 I.R.B. 459

REG–112991–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632Ann. 2002–38, 2002–14 I.R.B. 738

REG–115054–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–119436–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–120135–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–125450–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–125626–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–126485–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–137519–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–142299–01Corrected byAnn. 2002–15, 2002–7 I.R.B. 540Ann. 2002–30, 2002–11 I.R.B. 632

REG–142686–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

REG–159079–01Corrected byAnn. 2002–30, 2002–11 I.R.B. 632

Revenue Procedures:

84–37Modified byRev. Proc. 2002–1, 2002–1 I.R.B. 1

84–57Obsoleted byT.D. 8976, 2002–5 I.R.B. 421

Revenue Procedures:—Continued

87–50Modified byRev. Proc. 2002–10, 2002–4 I.R.B. 401

89–45Superseded byRev. Proc. 2002–23, 2002–15 I.R.B. 744

96–13Modified byRev. Proc. 2002–1, 2002–1 I.R.B. 1

97–27Modified and amplified byRev. Proc. 2002–19, 2002–13 I.R.B. 696

98–49Obsoleted byT.D. 8976, 2002–5 I.R.B. 421

99–49Modified and superseded byRev. Proc. 2002–9, 2002–3 I.R.B. 327

2000–20Modified byRev. Proc. 2002–6, 2002–1 I.R.B. 203

2000–46Superseded byRev. Proc. 2002–22, 2002–14 I.R.B. 733

2001–1Superseded byRev. Proc. 2002–1, 2002–1 I.R.B. 1

2001–2Superseded byRev. Proc. 2002–2, 2002–1 I.R.B. 82

2001–3Superseded byRev. Proc. 2002–3, 2002–1 I.R.B. 117

2001–4Superseded byRev. Proc. 2002–4, 2002–1 I.R.B. 127

2001–5Superseded byRev. Proc. 2002–5, 2002–1 I.R.B. 173

2001–6Superseded byRev. Proc. 2002–6, 2002–1 I.R.B. 203

2001–7Superseded byRev. Proc. 2002–7, 2002–1 I.R.B. 249

2001–8Superseded byRev. Proc. 2002–8, 2002–1 I.R.B. 252

2 A cumulative list of current actions on previously published

items in Internal Revenue Bulletins 2001–27 through 2001–53 is

in Internal Revenue Bulletin 2002–1, dated January 7, 2002.

May 13, 2002 iv 2002–19 I.R.B.

Revenue Procedures:—Continued

2001–13Corrected byAnn. 2002–5, 2002–4 I.R.B. 420

2001–16Modified byAnn. 2002–26, 2002–11 I.R.B. 629

2001–27Supplemented byRev. Proc. 2002–20, 2002–14 I.R.B. 732

2001–35Obsoleted, except as provided in section 5.02 byRev. Proc. 2002–24, 2002–17 I.R.B. 798

2001–36Superseded byRev. Proc. 2002–3, 2002–1 I.R.B. 117

2001–41Superseded byRev. Proc. 2002–2, 2002–1 I.R.B. 82

2001–51Superseded byRev. Proc. 2002–3, 2002–1 I.R.B. 117

2002–3Modified byRev. Proc. 2002–22 I.R.B. 733

2002–6Modified byNotice 2002–1, 2002–2 I.R.B. 283

2002–8Modified byNotice 2002–1, 2002–2 I.R.B. 283

2002–9Modified and clarified byAnn. 2002–17, 2002–8 I.R.B. 561Modified and amplified byRev. Rul. 2002–9, 2002–10 I.R.B. 614Rev. Proc. 2002–17, 2002–13 I.R.B. 676Rev. Proc. 2002–19, 2002–13 I.R.B. 696Rev. Proc. 2002–27, 2002–17 I.R.B. 802Rev. Proc. 2002–28, 2002–18 I.R.B. 815

Revenue Rulings:

55–261Distinguished byRev. Rul. 2002–19, 2002–16 I.R.B. 778

55–747Revoked byNotice 2002–8, 2002–4 I.R.B. 398

61–146Distinguished byRev. Rul. 2002–3, 2002–3 I.R.B. 316

64–328Modified byNotice 2002–8, 2002–4 I.R.B. 398

66–110Modified byNotice 2002–8, 2002–4 I.R.B. 398

Revenue Rulings:—Continued

73–304Superseded byRev. Proc. 2002–26, 2002–15 I.R.B. 746

73–305Superseded byRev. Proc. 2002–26, 2002–15 I.R.B. 746

76–270Amplified and superseded byRev. Rul. 2002–20, 2002–17 I.R.B. 794

79–151Distinguished byRev. Rul. 2002–19, 2002–16 I.R.B. 778

79–284Superseded byRev. Proc. 2002–26, 2002–15 I.R.B. 746

80–218Superseded byRev. Rul. 2002–23, 2002–18 I.R.B. 811

89–29Obsoleted byT.D. 8976, 2002–5 I.R.B. 421

92–19Supplemented in part byRev. Rul. 2002–12, 2002–11 I.R.B. 624

2002–7Corrected byAnn. 2002–13, 2002–7 I.R.B. 540

Treasury Decisions:

8971Corrected byAnn. 2002–20, 2002–8 I.R.B. 561

8972Corrected byAnn. 2002–23, 2002–8 I.R.B. 563

8973Corrected byAnn. 2002–14, 2002–7 I.R.B. 540

8975Corrected byAnn. 2002–21, 2002–8 I.R.B. 562

8976Corrected byAnn. 2002–21, 2002–8 I.R.B. 562

8978Corrected byAnn. 2002–39, 2002–14 I.R.B. 738

2002–19 I.R.B. v May 13, 2002