TABLE TWO

2002 IRA, QUALIFIED PLAN, & SECTION 403 ANNUITIES MINIMUM

REQUIRED DISTRIBUTION (MRD) RULES

EFFECTIVE DATES

January 1, 2003 is the effective date for the application of most rules. MRD’s must be re-determined under new rules from that date, which means:

1. Checking initially to see if there is any change in beneficiary that would affect the other beneficiaries. For example, “contingent beneficiaries” are now excluded from the computations involving multiple beneficiaries, which could eliminate the youngest life, and substantially change the MDR.

2. September 30, XXXX The Designated Beneficiary must now be determined as of October 30^th, of the year following the decedent employee’s death, to allow time for the proper computation of MRD before year end.

3. December 31, 2003. If the Employee/Owner died before RBD, the Beneficiary may elect out of the five year distribution cycle and into the life expectancy computation, iif he catches up any missing distributions by December 31, 2003, or by the year of the 5^th anniversary of the Employee’s death. This should mean that the farthest back you can push this election is a 1997 year of death.

4. The year 2002… is a transition year, during which the participant may use either the old or new tables. IRS doesn’t care, because if you use the old tables, you most likely will take a larger distribution.

5. October 31, 2003, and every October 31^st thereafter, as appropriate. If the beneficiaries have taken their interest by reason of being beneficiaries of a trust, rather than as designated beneficiaries, the new rules allow the trust to be transparent and the named beneficiaries will be the designated beneficiaries IF the Trustee files the necessary identifying paperwork with the IRA or Plan custodian

6. Separate accounts with different beneficiaries can be established at any time, either before or after the employee/owner’s required beginning date. The separate accounts are recognized for purposes of determining required minimum distributions only after the LATER of the year the Employee dies (whether before or after the RBD) or the year the separate accounts are actually established.

Additionally, that in order to determine the distribution period for the separate account, so that the ages of the other beneficiaries do not affect the separate account, the separate account must be established no later than the end of the year following the year of the employee’s death.

7. Dates for Spousal Elections: In a broadening of the 2001 proposed rules, the spousal election can be made any time after the IRA owner’s date of death. However, the MRD for the year of the owner’s death is determined as though the owner lived the entire year, and the spouse is not required to receive a current distribution in the year of death in excess of the appropriate amount having already been distributed to owner before he died.

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May 2002 All Rights Retained Sara Vannucci, JD

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